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Solar Industries fell 10% intraday after announcing plans to acquire South Africa-based Omnia Holdings for approximately ₹12,951 crore.
Why the fall: investors raised concerns over how Solar Industries will fund the large, all-cash acquisition.
The deal will be financed through internal accruals and long-term debt, raising concerns that higher borrowings could increase interest costs and put pressure on the company’s balance sheet and return ratios in the near term.
Solar Industries is one of the leading manufacturers of explosives and ammunition and has expanded into defence and aerospace products such as rockets and drones.
Why the deal matters: the acquisition will help Solar Industries expand its global footprint and strengthen its position in the mining and blasting solutions market.
The deal will give Solar access to Omnia’s mining business, which offers open-cast mining services, bulk explosives, electronic detonation systems, digital blasting solutions and mining chemicals.
But the deal goes beyond mining. Solar will also enter the crop nutrition and biological solutions space through Omnia’s agriculture business, which offers products under its Nutriology and Agribio platforms.
The numbers: Solar Industries expects the combined business to generate ₹32,000 crore in revenue by FY28. Separately, the company plans to spend ₹12,000 crore on its defence vertical.
