Stove Kraft to step in Electric Switches -; Accessories segment via acquisition of SKAVA Electric biz; Stock gains 3%

3 Jan 2022 , 03:13 PM

Stove Kraft will foray into the business of manufacturing low voltage switchgear solutions like electrical switches, sockets, distribution boxes, switchboards, M.C.B, bulb holders, etc. The company will acquire the business and IPR rights from SKAVA Electric Private Ltd on a slump sale basis for total consideration of Rs4cr in cash which is subject to due diligence and regulatory approvals.

As part of this acquisition, the founder of SKAVA will be appointed as a business head of this segment and will be associated with Stove Kraft for at least 4 years to ensure a smooth transition as well as support future business growth. In addition, Stove Kraft will also absorb the design, operation & manufacturing team from SKAVA Electric Private Ltd to kickstart the production. Further, Stove Kraft also plans to incur an additional CAPEX of Rs5cr over the next 3-4 years on moulds and machines to increase the production capacity.

Rajendra Gandhi, Managing Director said, “This acquisition will act as a natural extension to our existing product offerings of Pigeon LED. SKAVA enjoys a strong brand recall and has a wide distribution network in Tier-I and Tier-l! cities of Southern India. SKAVA has developed multiple innovative products in the past and with the support of Stove Kraft will continue to do so in the future as well. With this acquisition, Stove Kraft will cater to the mid-segment Electric Switches & Accessories segment and aims to capture a market share of 3% in the next three fiscal years”

SKAVA currently enjoys a robust distribution network in Southern India and will supplement Stove Kraft’s existing distribution network. The combined sales network will comprise of retail network, builder projects through professional channels of interior designers/architects, e-commerce platforms like Amazon, Flipkart, Udaan, JioMart etc. and leading physical channel partner networks like Croma, Future group, DMart, Reliance Group, etc.

At around 3.11 pm, Stove Kraft was trading at Rs1005 per piece up by 3.2% on Sensex.