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    Rajesh Exports in talks to pick up stake in Swiss gold refinery Valcambi for Rs 2,500 crore

    Synopsis

    In the fiscal year through March 2015, India’s gold imports were $34.3 billion, second only to crude and petroleum products’ net imports of $82.2 billion.

    ET Bureau
    MUMBAI: Listed jeweller Rajesh Exports is in talks to acquire a large stake in Swiss gold refinery in an all-cash deal which could be valued at about $400 million (over Rs 2,500 crore at current exchange rate). According to two persons aware of the negotiations, the Bengaluru-headquartered company had sounded out Valcambi, owned by the S&P500-listed Newmont Mining Corporation, on a possible transaction.

    Valcambi refines around 1,200 tonnes of gold every year, making it one of the world’s largest. Names of some of the other prospective refineries doing the rounds in industry circles are Argor-Heraeus and Metalor, both based in Switzerland.

    Rajesh Exports will seek approval for the purchase of one of these refineries at a board meeting on July 2.

    The deal, if consummated, would help the company secure a steady supply of rough gold, expand its reach and raise its bottom line, which stood at a paltry 1.3% of its consolidated revenue in 2014-15, they added.

    Image article boday


    “This would be an all-cash deal, 70% (around $280 million) of which would be met from internal accruals and the rest from overseas borrowing,” said one of the persons cited earlier. “Besides certainty in supply, it would help Rajesh Exports transfer technology to its own refinery in Uttarakhand, which refines around 60 tonnes annually.”

    At the end of March 31, 2015, the company’s net worth was Rs 3,419.9 crore. Outstanding debt at that date was Rs 3,677.6 crore. Asked to confirm whether the proposed announcement pertained to a gold refinery in Switzerland and the $400-million price tag, Rajesh Mehta, CMD, Rajesh Exports, said: “Being a listed company, we are duty-bound to first intimate the stock exchanges about any transaction before speaking with the media.”

    The share of Rajesh Exports hit a 52-week high of Rs 328.9 on Tuesday, before closing up 5.6% at Rs 326.3 apiece. Since the company’s intimation to stock exchanges about a proposed acquisition, the share has risen 16.5% against a 0.2% rise in the Sensex over the same period.

    Omar Jabara, group executive, corporate communications, at US-based Newmont Mining Corporation, which holds over 60% in Valcambi, said: “Our policy is not to comment on speculation regarding mergers and acquisitions.” E-mail queries sent to German multinational Heraeus, a shareholder in Argor-Heraeus, and Metalor Technologies went unanswered till the time of going to press. The proposed refinery is accredited by London Bullion Market Association (LBMA).

    “There’s more than enough room for another LBMA accredited refiner in India,” said Rajesh Khosla, MD, MMTC Pamp, the only refiner in India, which is on the LBMA’s good delivery list. In the fiscal year through March 2015, India’s gold imports were $34.3 billion, second only to crude and petroleum products’ net imports of $82.2 billion.

    Gold miners’ lobby World Gold Council said India imported 769 tonnes of gold in 2014, 7% lower from the previous year. The country is the world’s largest importer of gold. Households here are believed to have 20,000 tonnes of gold. Rajesh Exports derives around 95% of its revenues from exports of jewellery, medallions, etc to the Middle East, Far East, the US and Europe. The company’s consolidated revenue was Rs 50,463 crore in FY15. However, its profit after tax was just Rs 654.93 crore.


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    ( Originally published on Jul 01, 2015 )
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