Hampidjan Announces Strategic Investment in Kohinoor Ropes, India

Hampiðjan hf. has signed today, few minutes ago, an agreement to acquire a 75.1% stake in the Indian net and rope manufacturing company Kohinoor Ropes Pvt. Ltd.. Various formalities remain to be completed before the final settlement, but it is expected that it will only take a few weeks as no approval from the competition authorities is required, neither in Iceland nor in India. Due diligence, financial, legal and for ESG has been largely completed.

Kohinoor is one of the largest manufacturers of nets and ropes in India with an annual production of approximately 14,300 tons of ropes and nets. The company employs over 700 people and has three locations, two net and rope factories in Selu and a net workshop in Jalna. The company also has an office in Aurangabad. Kohinoor's operations are in the state of Maharashtra and the offices are about 375 km east of Mumbai. Transportation is good as new expressways to Mumbai are being opened from Sela and Jalna. To give a further sense of the size of the company, it can be mentioned that the area of ​​the factory buildings is almost 60,000 m2. Compared to Hampidjan's operations in Lithuania, there are also about 700 employees there and the area of ​​the buildings is about 45,500 m2. In total, the employees of the Hampidjan group will be about 2,700 after the acquisition of a majority stake in Kohinoor.

Kohinoor's turnover in 2024 was 26.2 m€ and EBITDA 3.6 m€. The purchase price for a 75.1% stake in Kohinoor is estimated at 21.9 m€ but will change based on the debt position and working capital position of the company when the acquisition goes through. The EBITDA multiplier in the acquisition based on the above EBITDA is 10.86.

If the target of 4.45 million € EBITDA in the 2025 financial year is achieved, an additional payment of 2.07 million € will be paid to the sellers and if the target of 5.52 million € EBITDA is achieved in the 2026 financial year, an additional payment of the same amount, 2.07 million €, will also be paid to the sellers. The total purchase price, if all goes well, will therefore be 26.0 million €. The acquisition will be financed with Hampiðjan's own capital and a loan from Arion Bank in the amount of 15.0 million €.

Kohinoor has been a close partner of the Hampiðjan Group for years and the Hampiðjan Group was the company's largest single customer last year, as a large part of the twisted ropes that Hampiðjan uses come from Kohinoor. Collaboration has also been growing rapidly in aquaculture-related products recently, especially in the production of fish cages.

Kohinoor was founded in 1984 by the late Asaram Baheti, but his three sons have managed the company together for the past few decades. The brothers' sons have now largely taken over the business and have agreed to continue working with the company for the next decade. The Baheti family is very close-knit and the business has been successful from the beginning. The family will continue to own a 24.9% share in the company, but it is important for Hampidjan to have good co-owners who know the company and its staff in every detail, are part of the local community and know all the infrastructure. The Baheti family's shareholding is tied up in their ownership for a minimum of 8 years.

For Hampidjan, this transaction creates great potential for streamlining operations and entering new markets. Hampidjan's value chain, from plastic pellets to the most advanced trawls and fish farms, is broadened by the acquisition of Kohinoor and provides an even stronger foundation for the operation.

In Hampidjan's share offering in the summer of 2023, new share capital was offered to pay off the debts of the Norwegian company Mørenot and to further build up Hampidjan's operations in Lithuania. The first part was immediately sold, but increased competition in the aquaculture markets in the North Atlantic and rising costs in Lithuania have led to other options, such as further development in Lithuania, being considered.

Operating costs for companies are generally favorable in India compared to Europe. Among other things, the price of raw materials in India is considerably more favorable than in Europe and electricity prices are also favorable, in addition to Kohinoor producing its own electricity with solar cells, which is favorable in this region due to the stable and sunny weather.

Especially in terms of construction costs, the construction period in India is relatively short, as it only takes about 8 months to build a good factory building from scratch. Thus, it is planned to purchase land of about 120,000 m2, which corresponds to 12 hectares, and start construction of a building of about 20,000 m2 for the operations that are planned to be moved to India from Europe in the spring and to get the operations up and running before the end of the year. The investment related to this is about 6 m€, but it will be offset by the sale of other assets that will be released with these transfers, and their sales value will be about 3.8 m€, and in addition, rental payments in Lithuania will decrease considerably in the coming years due to these changes.

One third of the Hampidjan Group's rope consumption today comes from Kohinoor, and this presents an opportunity to expand this business. Hampidjan's operations worldwide will open up new sales channels for Kohinoor's products and complement the product range that Hampidjan's subsidiaries offer today.

The benefits of this transaction are therefore multifaceted. Instead of moving operations to Lithuania to a greater extent, as previously planned, operations will be expanded in India by moving some of the aquaculture-related production currently located in Norway, Poland and Lithuania to Kohinoor. The operations of Hampidjan Baltic, which produces specialized ropes for fishing gear and ultra high performance ropes, and Vonin Lithuania, which produces fishing gear and fish farming pens, will remain largely unchanged, as it is important to have fishing gear production close to markets in the North Atlantic, as short lead times for fishing gear are often required and there must also be a fast service for aquaculture. For example, the production of ultra high performance ropes that has been produced by Mørenot in Norway will be transferred to Hampidjan Baltic in the coming weeks, as a step in further developing that company into advanced rope production, which now has one of the most technologically advanced rope factories in the world.

The acquisition of Kohinoor opens up opportunities to enter markets that have not been accessible due to distance from Europe and high production prices there. For example, Kohinoor has achieved notable success in Chile, which is the second largest salmon producing country after Norway. Sales there can be further increased by integrating the knowledge and experience of Hampidjan and Kohinoor. Access to aquaculture markets in the Middle East will be increased, as Hampidjan's subsidiary, Mørenot Aquaculture, has also worked on large aquaculture projects in recent years. There are also opportunities in Asia and Oceania, where two Hampidjan subsidiaries operate, Hampidjan New Zealand and Hampidjan Australia.

The potential for growth and optimization with the acquisition of Kohinoor is therefore large and diverse and will be reflected in the operations of the Hampidjan Group partly this year but mostly next year, when the effects of the optimization measures are expected to be fully realized.

In the share offering in the summer of 2023, it was announced that, following the share capital increase, a five-year journey would begin to fully take control of Mørenot's operations and achieve the optimization that the acquisition entailed. Changed circumstances in Norway and Lithuania, as mentioned above, delayed progress last year, but with the acquisition of Kohinoor, the strategy and plans have become clearer, so that the goals set in the share offering remain unchanged.

Hjörtur Erlendsson CEO Hampidjan:

"The acquisition of the majority stake in Kohinoor will increase Hampidjan's competitiveness and increase our chances of being one step ahead of our competitors in the coming years with the optimization that can be achieved in a short time. We look forward to work with our valued parner, Kohinoor, in the years to come.

It will be possible to transfer purchases of products that Kohinoor produces, which are currently purchased from other rope and net manufacturers, and capture in full the margin that is in the value chain. Kohinoor's product offering will increase the product range of Hampidjan's companies around the world and simultainously increase Kohinoor's access to the markets in which we already operate, Kohinoor's production volume will increase and increased margins will also be created in Hampidjan's subsidiaries.

Transferring production to India will involve considerable optimization because the production environment in India is very favorable, land for construction is available at favorable prices and construction costs are a fraction of what they are in Lithuania, not to mention Iceland. The cost of raw materials is significantly lower than we are used to in Europe for the same types of raw materials.

The biggest difference, however, is the labor cost, which is really the most important for us, because the production of materials for fishing gear and fish farming pens is labor-intensive, especially when it comes to assembling fishing gear and fish farming pens. Labor costs in India are significantly lower than in comparable jobs in Europe.

With this combined, we can gain an advantage over our competitors and also use this position to enter new and foreign markets that we have not sold much to until now.

There are therefore exciting times ahead for us in the Hampiðjan group and it is a big challenge to make the most of this position in the coming months and achieve efficiency in the autumn, which will then pay off to a greater extent next year.

Nandkishor Baheti CEO Kohinoor:

„We are delighted to announce that Kohinoor Ropes has entered into a strategic partnership with Hampiðjan Group, a world-renowned leader in the Nets and speciality ropes industry. This investment will see significant expansion plan to boost our production capabilities in India.

This collaboration presents an incredible opportunity for Kohinoor. By joining forces with Hampidjan, which operates in 78 different locations across 21 countries globally, we will streamline our operations, benefit from advanced technologies, and increasing sales to global markets. Our strong production capacity, coupled with Hampidjan's extensive value chain, will create a powerful synergy that enhances our growth and competitiveness.

Kohinoor has always been at the forefront of innovation, and this partnership will further strengthen our position as a market leader. We look forward to leveraging Hampidjan's expertise and global reach to explore new opportunities and achieve even greater success together.

Together, we are poised for an exciting future.“

Hampidjan's advisors in India are Deloitte and the law firm CAM - Cyril Amarchand Mangaldas, along with Logos in Iceland. The sellers' advisors are AVA - Ahuja Valecha & Associates LLP and the law firm Khaitan & Co.

For further information, please contact CEO Hjörtur Erlendsson at 664 3361

This information is being made public in accordance with Hampiðjan hf.'s disclosure obligations under the European Union Regulation on Market Abuse No. 596/2014 (MAR), cf. Act No. 60/2021 on measures against market abuse. The information concerns a decision to acquire a majority stake in the Indian company Kohinoor, which was considered to constitute inside information within the meaning of Article 7 of MAR. This announcement is being made public by Emil Viðar Eyþórsson, CFO of Hampiðjun hf., in accordance with the company's disclosure obligations under MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055. The information was made public at 13:20 on February 7th 2025.