Elgi Rubber's Subsidiary Rubber Resources Enters Leaseback Deal with SFG B.V
Elgi Rubber’s subsidiary Rubber Resources enters into a sale and leases back property in Maastricht to SFG B.V. for Euro 7.1 million. The agreement, initiated on July 15, 2024, is expected to be completed by September 30, 2024, enhancing operational flexibility.
by Damodharan N
Updated Jul 17, 2024
Table of Content
Elgi Rubber Company Limited disclosed that Rubber Resources B.V. has entered into an agreement to sell its land property in Maastricht, Netherlands, including buildings and installations, to SFG B.V.
The sale, conducted under a 'sale and leaseback' arrangement, was approved by Elgi Rubber's members through a special resolution via a Postal Ballot process on March 22, 2024.
Key Details of the Deal:
- Sale Consideration: The transaction values the property at Euro 7,100,000, equivalent to approximately Rs. 59.66 crores based on current exchange rates.
- Lease Agreement: Rubber Resources B.V. will lease back the property from SFG B.V. under a long-term agreement, paying a monthly rental of Euro 49,166.67 (excluding applicable taxes).
The agreement, finalized on July 15, 2024, is expected to be completed by September 30, 2024. Although not classified as a related party transaction, the deal underscores Rubber Resources B.V.'s strategic approach to optimizing its asset management while continuing its commercial operations.
Elgi Rubber Company Limited acknowledged a brief delay in the disclosure due to the receipt of finalized documents from the Netherlands on July 16, 2024, ensuring future compliance with timely reporting obligations under regulatory frameworks.
This transaction marks a significant step for Elgi Rubber's subsidiary in enhancing operational flexibility and financial stewardship amidst evolving market conditions.
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Rubber Resources
Rubber Resources, a pivotal division within Elgi, specializes in recycling and compounding rubber. Operating round-the-clock, it ensures consistent supply of high-quality products to local and international customers.
With expansions in India and the EU, the focus is on sourcing raw materials locally while being flexible to global demands. Future plans include increasing the use of recycled rubber in tires and exploring new markets for rubber granules.
Maintaining strong ties with tire manufacturers, Rubber Resources aims to innovate in raw materials, energy efficiency, quality standards, and technology, ensuring a sustainable and collaborative future with the tire industry.
Elgi Rubber Company
Elgi Rubber Company Ltd has established itself as a global leader in the rubber industry, pioneering pre-cured retreading technology and boasting the largest franchise network in India.
They offer comprehensive solutions for retreaders worldwide, including advanced machinery and consumables. With over 60 years of experience, Elgi contributes significantly to the circular economy by recycling tires and producing high-quality reclaim rubber.
Their global presence spans subsidiaries in the USA, Brazil, Sri Lanka, Netherlands, and Australia, supported by a robust distribution network. They continue to innovate with new product launches and maintain service excellence through a dedicated technical support team, ensuring their products are trusted by tire manufacturers globally.
Elgi Rubber's Subsidiary Rubber Resources Enters Leaseback Deal with SFG B.V - FAQs
1. What is the nature of the deal between Rubber Resources and SFG B.V.?
Rubber Resources sold its land property in Maastricht, Netherlands, to SFG B.V. and leased it back under a 'sale and leaseback' arrangement.
2. When was the agreement initiated?
The agreement was initiated on July 15, 2024.
3. When is the deal expected to be completed?
The deal is expected to be completed by September 30, 2024.
4. What is the sale consideration for the property?
The property was sold for Euro 7.1 million, equivalent to approximately Rs. 59.66 crores.
5. What terms will Rubber Resources lease back the property?
Rubber Resources will lease back the property under a long-term agreement, paying a monthly rental of Euro 49,166.67 (excluding applicable taxes).
6. Did Elgi Rubber's members approve the sale and leaseback deal?
Yes, the deal was approved through a special resolution via a Postal Ballot process on March 22, 2024.
7. Did the transaction classified as a related party transaction?
No, it is not classified as a related party transaction.
8. What strategic benefits does Rubber Resources aim to achieve through this deal?
The deal aims to optimize asset management while ensuring continuity of commercial operations.
9. What was the reason for the brief delay in disclosure by Elgi Rubber Company Limited?
The delay was due to the receipt of finalized documents from the Netherlands on July 16, 2024.
10. How does this transaction impact Rubber Resources' operational flexibility?
It enhances operational flexibility by freeing up capital tied in real estate while maintaining operational continuity.