RHI Magnesita Persistence for Growth: Acquires Refractory Business of Dalmia Bharat Refractories

RHI Magnesita, the leading global supplier of refractory products, announced the acquisition of the Indian refractory business of Dalmia Group (Dalmia Bharat Refractories Limited).

RHI Magnesita India Limited (“RHI” or “Acquiree”) is a leading India-based supplier of high-grade refractory products, systems and solutions to the India and West Asia region. The Company is promoted by a leading global supplier of refractory product company, RHI Magnesita. RHI Magnesita India Limited is listed on the nationwide bourses.

Dalmia Bharat Refractories Limited (“DBRL” or “Acquiror”) is a leading India-based producer of high alumina refractory bricks… DBRL provides a complete line of services including refractory design and layout for greenfield projects, refractory application and maintenance. DBRL offers end-to-end refractory products, solutions and services to customers in over 40 countries and is one of the oldest and leading suppliers of refractories to cement plants in India and the Middle East and North Africa region. The Equity shares of the Company are listed on Metropolitan Stock Exchange & Calcutta Stock Exchange.

Dalmia OCL Limited (“DOCL” or “Target”) is a wholly-owned subsidiary of DBRL having no active business operations or assets. As part of pre-transaction, Dalmia group will consolidate entire domestic refractories business of DBRL to DOCL by way of a slump sale.

History:

Dalmia Refractory

The refractory business has been a part of the group since 1939 and have acquired a few refractories over the years. The history as mentioned on its website is as below.

To build a stronger, unified, deeply aligned and efficient business machine, effective in March 2022, Dalmia Group consolidated their refractory business under DBRL. The consolidation was carried through two different schemes mainly:

• Transfer of Refractory Division of Dalmia Cement Bharat Limited to DBRL by way of a Slump Sale (Exchange).
• Amalgamation of Dalmia Refractories Limited and GSB Refractories India Private Limited with Dalmia Bharat Refractories Limited.

Before the transactions, DBRL was not having any operations. Thus, effectively entire Domestic as well as Overseas Refractory business of Dalmia Group was consolidated in DBRL. DBRL discharged the consideration for Slump Exchange through issue of Equity Shares plus Compulsorily Convertible Debentures amounting to INR 355 cr & for amalgamation through issue of equity shares amounting to INR 486 crores. The Appointed Date for Slump Sale was 1^st April 2019 & for Amalgamation was 1^st April 2020.

RHI Magnesita

In 2021, RHI Magnesita group successfully consolidated their 2 private companies into listed entity through merger to create one strong entity that will be refractory market leader in India. Interestingly, in one of its kind, Hon’ble National Company Law Tribunal  (NCLT) Mumbai Bench rejected the merger scheme to which companies filed an appeal in National Company Law Appellate Tribunal (NCLAT). The NCLAT by an order dated set aside the order passed by the NCLT rejecting the scheme and directed the NCLT to approve the scheme. Subsequently, NCLT, Mumbai Bench, approved the scheme.

Post-successful consolidation, the group set a strategic business goal of doubling revenue by FY 2026. The company also announced significant capex of INR 400 crore.

Pre-Transaction Step: Slump Sale