Mumbai: Rajesh Exports, the world's largest gold jewellery maker, Monday announced the acquisition of Switzerland-based gold refinery Valcambi for USD 400 million to gain access to raw materials at lower prices.
Rajesh Exports acquired Valcambi -- the world's largest precious metal refiner -- through its Singapore-based subsidiary and will finance the deal from internal accruals and a long-term debt from Credit Suisse.
The company said it has "fully acquired European Gold Refineries, the 100 percent holding company of Valcambi in an all cash deal with a total investment of USD 400 million (Rs 2,560 crore)."
Grant Thorton assisted the company in due diligence.
Announcing the deal, Rajesh Exports Managing Director Prashant Mehta said, "The consistent supply of raw material is a big issue. With this acquisition, there will be smooth supplies at lower prices."
Valcambi, which refines and sells 945 tonnes of gold and 325 tonnes of silver per year, generated revenues in excess of USD 38 billion on an average per year for last three years. It can supply entire India's demand.
With this acquisition, Rajesh Exports said the company will upgrade and expand its existing refinery at Rudrapur in Uttarkhand and manufacturing unit in Bengaluru, while it would also look at venturing into gold mining in the next 2-3 years.
"In 1-2 years, we are planning to expand our refinery in Uttarakhand with world-class technology from Valcambi. This will be under the 'Make in India' initiative that help us in providing international raw material in the domestic market," Mehta told reporters.
The acquisition will help boost revenues and profitability of Rajesh Exports in coming years, he added.
Valcambi CEO Michael Mesaric said, "The coming together of REL and Valcambi would ensure Valcambi improves on its global share of gold business, by opening up new markets in India, Middle East (West Asia) and China."
Valcambi refinery is accredited to London Bullion Market Association (LBMA).
"With this acquisition, we will also be acquiring a larger market share besides helping in our global gold business expansion. We will seamlessly integrate Valcambi into Rajesh Exports Ltd (REL) group and will continue with the professional and globally acclaimed management of Valcambi," Rajesh Exports Chairman Rajesh Mehta said.
The company expects to become debt-free in four years, he added.
Going forward, Rajesh Exports said the company, which has a controlling market share (50 percent) in supplying raw materials to 14 states, is also planning to expand the number of stores under its retail brand 'Shubh' to 450 from the existing 82 in three years.