Information  X 
Enter a valid email address

Dhir India Inv. plc (DHIR)

  Print      Mail a friend

Wednesday 03 October, 2007

Dhir India Inv. plc

Third Investment

Dhir India Investments plc
03 October 2007

3 October 2007

                           Dhir India Investments plc
                        ("Dhir India" or the "Company")

 Acquisition of 26% interest in secured debt of Synthetics & Chemicals Limited

Dhir India (AIM: DHIR), the first UK quoted company established to invest in the
circa $50 billion* Indian non performing assets sector, announces that it has
established Aquamarine Synthetics and Chemicals Private Limited, a Special
Purpose Vehicle ("SPV"), for the function of acquiring 26% of the total secured
debts of Synthetics & Chemicals Limited ("S&CL"). This transaction will involve
the break up and sale of assets of S&CL.

Under the terms of the agreement, it is expected that Dhir India will invest
£1.40 million and Alok Dhir and/or certain of his connected persons will invest
£0.47 million. Out of the expected aggregate investment of £1.87 million an
amount of around £0.55 million has already been invested to acquire 7.23% of the
debt of S&CL.

Synthetics & Chemicals Limited was incorporated in 1960 and is a manufacturer of
styrene butadiene rubber, nitrite rubber, styrenated phenol and alcohol. The
company suspended works in July 1999 due to severe capital constraints, labour
and power supply issues.

The company's 1,200 acre plant benefits from a railway siding, facilitating the
movement of raw materials and products and a license for an alcohol distillery.
It is situated approximately 15km from Bareilly in Uttar Pradesh, a tier II
industrial city in North India. The estimated current market valuation of the
land and other assets is approximately £30.49 million, against which Dhir
India's investment is secured.

Commenting on the investment, Alok Dhir of Dhir India commented:
"This significant stake in the debt of S&CL gives Dhir India a number of
opportunities to realise maximum value through the sale of the debt to an
eventual acquirer or partnership with a company undertaking the resolution of
the debt.

"The high value of the real estate element of S&CL's assets secures our
investment in the company and we anticipate that this project will take around
6-8 months to execute."

(*Source: The Wharton School, February 2007)

For further information, please contact:

Shiva Consultants         Evolution Securities         Tavistock Communications
Alok Dhir                 Tom Price                    Simon Hudson
Shivi Agarwal             Jeremy Ellis                 Rachel Drysdale
                          Chris Clarke
Tel: +91 11 424 10000     Tel: + 44 (0) 20 7071 4300   Tel: +44 (0) 207 920 3150

About Dhir India Investments
Dhir India provides shareholders with both income and capital growth and was the
first UK quoted vehicle to provide western fund managers with the opportunity to
invest in the Indian non performing assets market. In July 2007 it raised £25
million and commenced trading on AIM.

The Company primarily considers four types of investment opportunity:

       - Turnaround of companies
       - Re-sale of assets or companies
       - Break-up and sale of assets
       - Bridge financing

The current stock of non performing assets (NPAs) in India was built up
primarily as result of the transformation of the Indian economy in the 1990s
from a centrally regulated to a more free market economy. During this time,
commercial lending rates were as high as 18-20 per cent. per annum, whilst the
industrial growth rate remained sluggish at 2-3 per cent. per annum and Indian
industries could not cope with the competition from international companies,
which did not have such a high cost of capital.

This has created an opportunity to invest in NPAs, which are typically
over-leveraged capital structures with insufficient liquidity and in default of
their obligations to creditors. Often these companies have significant assets
and/or solid underlying business fundamentals, which are not being fully
utilised in spite of the fact that the rate of growth in the industrial sector
has caught up with that of the rest of the economy, being an estimated 9-10 per
cent. per annum since 2004-2005.

In such circumstances, Dhir India believes that the resolution of the existing
debts, and in some cases a turnaround of the underlying business, can lead to
substantial profits on exit from the investments being generated in the short
and medium term.




                      This information is provided by RNS
            The company news service from the London Stock Exchange

a d v e r t i s e m e n t