Focus on vendor, contractor ties: Pidilite
MUMBAI : Fevicol maker Pidilite Industries is seeking to strengthen its partnerships with vendors and contractors before it forays into the non-banking financing business with the acquisition of an existing company, said Bharat Puri, managing director and chief executive officer, Pidilite. According to press statement released late on Wednesday, Pidilite will be acquiring Pargro Investments Pvt. Ltd, which is owned by its promoter group.
It will enter a share purchase agreement to acquire the NBFC through a wholly-owned subsidiary on or before 31 March. The acquisition will be done at a fair value of up to ₹10 crore, the company said. Pidilite’s decision to establish an NBFC aims to strategically safeguard its network of vendors and carpenters, seen by investors as a valuable asset.
The firm, having nurtured the network over several years, addresses their financial requirements, preventing potential exploitation by fintech players or competitors. Pidilite is likely to invest ₹100 crore in tranches in Pargro, “through an optimum mix of equity and debt over the next two years", Pidilite said. Currently, the NBFC is not involved in lending operations and was debt-free on 31 October.
“The reason for one of our successes is our deep connect with the user and dealer universe, carpenter contractors, plumbing contractors, masons, etc. We have a lot of demand from this ecosystem, pushing back and saying that we need short-term capital. There is nobody who knows them better than we do.
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