22 Jun 2009 07:00
Mortice Ltd
22 June 2009
Mortice acquires Delhi FM company
Mortice Ltd (AIM:MORT) ("Mortice" or the "Company"), the AIM listed security and facilities management company based in India is pleased to announce that it has acquired Rotopower Projects Private Limited ("Rotopower"), an Indian Facilities Management ("FM") company based in Delhi, for a consideration of Rs. 100 million (£1.28 million) after making adjustment for debts and sufficient working capital. The acquisition, completed through the Company's subsidiary, Tenon Property Services Private Limited ("Tenon"), will be satisfied from the Company's existing resources and is subject to certain conditions precedent. The Company will make a further announcement once these conditions have been satisfied.
Under the terms of the share purchase agreement (the "Agreement"), the consideration is payable immediately on the closing date. The sellers have agreed to deposit Rs.15 million (approximately £190,000) with the Company in respect of representation and warranties to be paid to the sellers on the second anniversary of the acquisition which would be subject to any claims made under the indemnities provided to Tenon by the sellers under the Agreement.
Information on Rotopower
Rotopower, which has a successful track record of more than 12 years, employees over 1,600 employees and services over 75 clients across 15 states in India. The Company provides a range of facilities management services ("FM") that include mechanical and electrical maintenance services, annual maintenance contracts and housekeeping services to a wide range of customers. Rotopower also provides services to telecom tower companies for the maintenance and running of electrical equipment which typically includes DG sets and air conditioning. The company has a wide range of high profile and prestigious clients which includes multi-national organisations in the IT, telecommunications and banking sectors, representing the high growth sectors of the Indian economy. As at 31 March 2009, Rotopower had profits after tax of Rs. 7.75 million (approximately £99,000) and net assets of Rs. 27.8 million (approximately £355,000).
Information on Tenon
Tenon is the FM arm of Mortice. Unlike most other FM companies, Tenon not only manages but also self-performs FM services. This vertically integrated approach is cost-efficient as it unlocks value in the supply chain and also provides better quality control, integrated systems and also enables multi-tasking without contractual demarcation. Tenon provides a full range of property and facilities management services to a growing 'blue chip' and diverse client portfolio throughout India.
Together, Tenon and Rotopower will provide FM services to over 7 million sq. ft. for over 100 clients throughout India with a combined workforce of just under 20,000 employees.
The Board believe that this acquisition will strengthen the FM arm of the Company, Tenon, significantly and enhance its existing revenues streams at the same time as increasing the capabilities of the Company's vertically-integrated FM service delivery model. Rotopower's strong presence in North India and growing presence in East India will complement Tenon's strong FM presence in South India and consolidate Tenon's pan-India FM services capability. Furthermore, the acquisition will give critical mass to Tenon's operations and demonstrates clearly the Group's commitment to delivering superior services to customers, providing additional technical capabilities under the combined delivery platform of Rotopower and Tenon.
Manjit Rajain, Executive Chairman of Mortice commented "We are delighted to have agreed the acquisition of Rotopower which has been concluded after an exhaustive search over many months during which we have researched a large number of potential acquisition targets.
Rotopower undoubtedly provides the Company and our investors with the best strategic and cultural fit and potential return on investment and we look forward to working together to maximise the opportunities identified for growth."
For further information please contact:
| Mortice Ltd | ||
| Manjit Rajain, Executive Chairman | Tel: +91 981 800 0011 | |
| Andrew Barker, Executive Director | Tel: +91 974 130 9401 | |
| Grant Thornton UK LLP | ||
| Fiona Owen | Tel: +44 207 383 5100 | |
| Jermyn Capital Partners PLC | ||
| Vishal Sodha | Tel: +44 207 399 2020 | |
| Pelham PR | ||
| Alex Walters / Francesca Tuckett | Tel : +44 207 337 1552 |
Notes to Editors
The Future Development of the Property and Facilities Management Market in India
Over the last decade, the Indian Property and Facilities Management market has seen considerable growth following the continuing influx of a large number of multinational corporations that are seeking a higher quality, cost efficient services. Market drivers include those such as, the recent relaxation of FDI regulations; hotel supply and demand; financial products and insurance for a new generation of wealthy Indians; a growing middle class with new aspirations; and increased privatisation of infrastructure projects and increased manufacturing outsourcing/off-shoring.
Rising labour and infrastructure costs mean that India cannot continue to compete on price beyond the next three to five years. Across all market sectors, the evolving market in India needs property and facilities management companies that can self-perform their services to unlock value throughout the supply chain.
The Directors believe that by vertically integrating with the supply chain for services such as transport management, critical environment management and maintenance, a truly-integrated property and facilities management service provider can significantly influence core business productivity and reduce risk. All of the major property and facility management companies in the market today are still, predominantly servicing customers in the first-tier cities and have little presence in the emerging cities. More businesses across a variety of sectors are now looking at the second and third tier cities to maximise growth potential and to be able to reduce the labour costs associated with location in the major cities.
The Directors believe that there is a need for service providers with a true pan-India presence to help these organisations to scale their operations and introduce operating efficiencies.