Last year, in August, CAG divested its energy division, Centum Adetel Transportation (CAT) to a China-based company Chauntie Electric (Tianjin) for euro 9.8M. In the agreement, 65% of the consideration was immediate payment and the remaining 35% after a transition period of 2 years.
Accordingly, Chauntie paid euro 6.3M to CAG in August 2020 and the name of CAT was changed to Holiwatt.
In its regulatory filing, Centum Electronics said that Chauntie was expecting large orders from the Chinese Railway business and had planned to use the technology bought from CAG. However, due to continued delays in getting the business caused by the spread of the Covid-19 pandemic resulted in low to negligible visibility of the business potential, Chauntie decided to file for insolvency of Holiwatt in the French Court.
Further, the company said that the French Court invited bidders for taking over the Holiwatt. However, there was only one bidder who agreed to take over a major part of the employees and assets at an almost negligible value.
That said, Centum Electronics said that CAG has decided to make a provision for impairment of the investment of euro 4.3 million in the books of accounts for the quarter ending June 2021.
On Sensex, Centum Electronics ended at Rs496.05 per piece down by 2.5%.