Benzinga | Sep 22, 2021 05:01PM EDT

Northern Technologies Reports Will Purchase Remaining Ownership Interest In Its Indian Joint Venture For $6.25M In Cash

Northern Technologies International Corporation (NASDAQ:NTIC), a leading developer of corrosion inhibiting products and services, as well as bio-based and biodegradable polymer resin compounds, today announced that it has acquired the remaining 50% ownership interest in its Indian joint venture, HARITA-NTI LTD. ("Zerust India"), for USD $6.25 million in cash. NTIC funded the purchase price with a combination of cash on hand and borrowings under its revolving line of credit, which was increased in connection with the transaction to $5.0 million.

"NTIC's network of joint ventures was carefully built over the last 35 years, in order to efficiently expand our access to international markets and enable us to provide on-site technical service to our global customer base," said G. Patrick Lynch, President and Chief Executive Officer of NTIC. "Many of our multinational customers either have their own operations in India or have suppliers based there, making it one of our strongest international markets. So, naturally, we look forward to further enhancing our presence there."

Zerust India was originally formed in 2000, to provide NTIC's leading Zerust(r) corrosion inhibiting products to a market that was rapidly becoming a key global source of high-quality automotive components. Zerust India had $5.7 million in revenue and $1.15 million in earnings in fiscal 2020 and $6.7 million in revenue and $1.77 million in earnings over the nine months ended May 31, 2021. Due to NTIC's original ownership interest in Zerust India being just 50%, U.S. generally accepted accounting practices had required that the joint venture be reflected in NTIC's consolidated financial statements via the equity method of accounting, with NTIC recording its 50% portion of the earnings in Equity in Income from Joint Ventures and Fees for Services Provided to Joint Ventures. With NTIC's fiscal year 2022 starting on September 1st, going forward, Zerust India, the now wholly owned subsidiary, will be fully consolidated on NTIC's consolidated financial statements effective as of September 1, 2021 and is expected to contribute approximately $10 million in net sales along with over $2.2 million in net income during fiscal year 2022, amounting to an additional $0.10 per diluted share in fiscal year 2022. NTIC's 75% ownership stake in Natur-Tec India Private Limited is unaffiliated with Zerust India and was not part of this transaction. As of today's announcement, NTIC has 10 operating subsidiaries and 18 global joint ventures across the world.