As steel hots up, IFGL eyes buyouts abroad

Font Size

Print

Feedback

Email

Discuss

Kolkata, May 7: IFGL Refractories Ltd, a leading manufacturer of refractories, plans to acquire family-owned concerns in Europe and the US to get the latest technologies, products and manufacturing lines, which would be shifted to low-cost India and China.

IFGL has budgeted around Euro 10 million (Rs 636 crore) for the acquisition.

It has plants in India, China, the US, the UK and Brazil making the special vessel- lining materials that can withstand temperatures of over 1500 degrees C involved in the steel-making process.

IFGL will also set up a factory at the Kandla special economic zone (SEZ) for manufacturing 300,000 pieces of continuous castings per year at an investment of Rs 50 crore.

IFGL reported a net profit of Rs 28.56 crore on a turnover of Rs 172.16 crore in 2007-08 against Rs 26.32 crore on a turnover of Rs 151.49 crore the previous year.

Pradeep Bajoria, director and chief executive officer, said that with steel production increasing at 8% globally and new capacity being added, IFGL requires to ramp up production and introduce new product lines. Acquisitions would help it in doing so.

Although Bajoria did not name the companies he was eyeing, he said there are a number of family-owned companies in Europe and the US, up for sale.

Operating costs in the US and UK are 40% higher than those in India. China's costs are even lower, at least 25% below India's. If IFGL bags any company in the US or UK, it will shift the production line to China.

"We have already shifted 40% of our Dart production from the US to China and looking to shift 100% of our production in the US and the UK to China. The facilites in the UK and the US would be used for developing more value-added products and support marketing," Bajoria said.

"However, the present trends show that the cost of doing business in China will increase as raw materials costs are going up there with calcination plants being closed down and the Chinese government levying a 17% export duty.