On May 30, 2022, Savita Oil Technologies Ltd (SOTL) informed the exchanges regarding the approval received from their Board of Directors regarding the amalgamation of Savita Polymers Ltd (SPL) with SOTL. Post this restructuring, the entire assets and liabilities will be transferred to SOTL.

The merger is likely to take 9-12 months subject to necessary statutory and regulatory approvals from stock exchanges, National Company Law Tribunal, minority shareholders, lenders, and creditors.

The objective of this merger is to consolidate operations under a single roof, which will provide higher diversification of product offerings and improve operating efficiencies and cost competitiveness as they are involved in similar line of business.

CRISIL Ratings follows a consolidated approach while arriving at the final rating of SOTL, and hence the impending merger will have no bearing on the rating of the company.

Incorporated in 1989 as a division of SOTL, SPL was divested from SOTL in 1992 and manufactures cable-filling compounds, petroleum jellies, micro-crystalline waxes, and specialty oils such as transformer and white oil. SPL also started manufacture and sale of natural ester dielectric fluid, under the brand, BioTransol, which is an eco-friendly, biodegradable and fire save alternative to conventional mineral oils used in transformers. Its facility is at Mahad in Raigad, Maharashtra.

The ratings continue to reflect the company’s established market position, diversified revenue profile, and healthy financial risk profile. These strengths are partially offset by vulnerability of operating margin to sharp volatility in forex rates and commodity prices, working-capital-intensive operations, and exposure to intense competition.

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