investment in associate company
KOTIC · price
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Kothari Industrial Corporation Limited (KICL) has approved the further acquisition of 3,99,00,000 equity shares of Phoenix Kothari Footwear Limited (PKFL) at Rs. 10 per share, amounting to a total cash consideration of about Rs. 39.9 crore. After this purchase, KICL's holding in PKFL will rise to 30%, making it a significant associate investment. PKFL is a footwear manufacturing company based in Chennai, incorporated in December 2022, and has reported nil turnover in the last three financial years (FY22-23 to FY24-25). The transaction is a related-party deal since KICL's Promoter and CMD, Mr. Rafiq J Ahmed, is also a director on PKFL's board, and the deal has been carried out at arm's length.
This is a growth-oriented investment into a still-nascent associate with no current revenue, so it does not add to KICL's near-term earnings. For shareholders, it signals the company's intent to expand its footwear business, but the related-party nature and PKFL's zero-revenue track record mean investors should watch whether PKFL starts generating revenue to justify the Rs. 39.9 crore outlay.