9/05/2006

IGPL eyes buyouts in Poland, Romania, Italy

I G Petrochemicals Ltd (IGPL), the third-largest producer of phthalic anhydride (PAN) in the world, is looking for acquisitions abroad.

Nikunj Dhanuka, managing director, IGPL, told DNA Money, “As our business is growing, we have to go for acquisitions to further increase our capacity.” The company is looking for suitable firms in Poland, Romania and Italy, he said, but declined to divulge further details.

On funding the acquisitions, Dhanuka said, selling equity stake was an option, “if we find the appropriate overseas company.”

PAN is widely used to manufacture products essential for the production of plastic, flexible PVC, varnish, paint, textile dyes, and pesticides.

IGPL is looking to scale up within the country, too, and is in talks with Asian Paints for its PAN plant in Ankleswar (Gujarat). “We have approached Asian Paints for their 18,000 tonne Ankleswar plant, but still not decided due to higher price. We are looking into overseas markets for acquisitions as IGPL exports about 75% of its products,” said Dhanuka.

Market sources said Asian Paints has quoted a price of Rs 200 crore for the facility.

IGPL has a production capacity of 1.1 lakh tonnes of PAN per annum in its manufacturing unit at Taloja, Maharashtra. Its main customers in the international market are Exxon Mobil, BASF, SABIC and ELF.

BSF of Germany and Aekyoung of Korea are the leading global players in PAN. Among its local competitors are Thirumalai Chemicals and Herdillia Chemicals, whose combined capacity is less than that of IGPL, and Asian Paints, which produces for captive consumption.

IGPL had incurred severe losses due to recessionary market conditions between 1998 and 2001, with the debt burden touching Rs 700 crore. However, it has since brought this down to a secured liability of Rs 125 crore, with UK-based international fund Spinnaker Capital investing Rs 125 crore in April this year.

The company expects to touch the Rs 500-crore turnover mark this fiscal.

Source:www.dnaindia.com



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