Sylph Technologies Limited, a publicly listed company under Scrip Code: 511447, has announced a strategic equity investment through a binding term sheet to acquire 25% of the equity share capital in Semitrone Conchem Limited, a Gujarat-based construction chemicals manufacturing company. This disclosure, dated 2nd July 2025, was made to BSE Limited under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

As per the official regulatory filing, the Board of Directors of Sylph Technologies has approved the execution of a term sheet for the acquisition of approximately 30,00,000 equity shares at ₹44.43 per share, aggregating to a cash consideration of ₹13,32,90,000. This represents 25% of the post-issue fully diluted share capital of Semitrone Conchem Limited.

Semitrone Conchem Limited, incorporated in 2018 under the Companies Act, 2013, is headquartered at Neelmani Chambers, Ashram Road, Ahmedabad, Gujarat. It operates in the construction chemicals manufacturing industry, catering to infrastructure and building sectors. This acquisition aligns with Sylph Technologies' plan to diversify and expand into high-potential industrial verticals, especially those related to infrastructure.

The transaction is being executed on an arm’s length basis, although it qualifies as a related party transaction, as Mr. Hasmukh Shah, a director of Sylph Technologies, holds 18,90,000 equity shares in the target company. Despite this, the deal is compliant with the regulatory framework and has been structured with due diligence and fairness.

The term sheet, executed on 2nd July 2025, stipulates that the investment will be completed within 180 days from the execution date, subject to execution of definitive agreements. It includes several safeguards and shareholder protections, including:

• Exclusivity clause, prohibiting Semitrone from entering into similar discussions with third parties during the validity of the term sheet.

• Put option clause, allowing Sylph to exit the investment if Semitrone fails to meet financial projections or violates agreed terms.

• Joint control over use of funds, wherein the subscription amount will be kept in a separate account accessible only via joint signatures.

• Customary representations and warranties, regulatory compliance assurances, and no outstanding undisclosed liabilities.

The subscription funds will be primarily used to meet operational needs and working capital requirements, as per the agreed business plan and financial projections. Sylph Technologies will gain governance rights and oversight mechanisms as a minority investor.

From a regulatory standpoint, no governmental or SEBI approvals are needed for this acquisition, and the consideration is to be paid entirely in cash. The valuation of Semitrone Conchem Limited for this deal has been pegged at a pre-money valuation of ₹39.98 crore, which reflects a strong belief in the growth potential of the construction chemicals market.

The deal is indicative of Sylph Technologies' strategic shift towards high-growth industrial sectors. By acquiring a substantial minority stake in an emerging player like Semitrone, Sylph aims to benefit from market expansion in construction and infrastructure. This move could unlock synergistic opportunities, allowing both companies to collaborate on innovation, distribution, and technology.

Additionally, Sylph’s investment includes mechanisms for dispute resolution through arbitration in Ahmedabad, detailed compliance warranties, and robust governance clauses, ensuring long-term trust between the two entities. The arbitral proceedings, in case of any dispute, will be conducted as per the Arbitration and Conciliation Act, 1996.

The termination clauses in the agreement permit Sylph Technologies to withdraw from the deal under defined circumstances, including material adverse changes or breach of warranties by Semitrone. These legal and operational controls are put in place to mitigate risks and ensure accountability.

On a broader level, the acquisition shows Sylph’s commitment to pursuing value-driven investments, positioning itself not just as a technology services company but also a strategic investor in aligned sectors. For Semitrone, the partnership brings financial capital, potential access to new markets, and an experienced partner in business operations and scale-up.

The INR 13.32 crore investment, when infused into Semitrone, is expected to enable accelerated growth, support manufacturing expansion, and increase product development efforts. As the construction chemicals segment in India is witnessing a surge due to infrastructure development, this timely investment could yield significant upside for Sylph and its shareholders.

As per the confidentiality clause, details of the transaction can only be disclosed to regulatory authorities or stakeholders as required under the law, maintaining the sanctity and privacy of the negotiation terms. However, public disclosure to stock exchanges under SEBI norms ensures transparency with investors and regulatory oversight.

In conclusion, this 25% equity acquisition by Sylph Technologies Limited in Semitrone Conchem Limited marks a notable move in the Indian midcap M&A space. It underscores Sylph’s ambition to tap into high-growth construction and industrial chemicals markets, while upholding corporate governance, shareholder value, and legal compliance. Investors and market watchers will now closely follow the outcome of this strategic collaboration and its long-term benefits for both companies.

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