Neha to acquire 3 floriculture firms

Neha to acquire 3 floriculture firms

Neha International Ltd, a Hyderabad-based floriculture company that exports cut-flowers, plans to acquire three floriculture companies based in Ethiopia.

Neha will acquire a 100% stake in the Mauritius-based Globeagro Holdings, which holds a 99% stake in Alliance Flowers Plc., and 50% stake each in Holetta Roses Plc. and Oromia Wonders Plc.

“The acquisition has been valued at Rs41.32 crore by the Mumbai-based merchant banker Keynote Corporate Services Ltd and we are planning to fund the acquisition partly by equity swap and partly by cash," says Neha managing director G. Vinod Reddy.

Shares of Neha rose 5%, or Rs2.50 a share, to Rs52.75 at close of Tuesday trading on the Bombay Stock Exchange, reaching a 52-week high. The shares were trading as low as Rs4.93 a share in October.

Neha proposes to offer 75.22 lakh shares of Rs10 each at a price of Rs42 per share, amounting to Rs31.59 crore, to the promoters of Globeagro Holdings. The balance, of some Rs9 crore, would be paid in cash in phases, he said. The transaction is expected to be complete by December.

Neha also plans a preferential offer to its promoters and associates to raise the Rs27.5 crore of funds required to meet the new capital expenditure and working capital needs of the company. “We hope to get consent for these moves at our AGM (annual general meeting) on 10 October. With the cross-border acquisitions, we expect profitability and turnover to go up significantly," Reddy said.

Neha, which was incorporated in 1993, had revenues of Rs3.25 crore and a profit after tax of Rs23.43 lakh in its most recent financial year.

Reddy attributes the lack of growth of Indian floriculture industry mainly to lack of post-harvest infrastructure facilities, high interest and freight costs.

“In this industry, freight accounts for nearly 45% of the total costs," he said. “Air freight cost from India to the European Union works out to around $2.5 per kg, whereas from Ethiopia, it is a mere $1.25 per kg."