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Rediff.com  » Business » Tata Metaliks may set up castings JVs

Tata Metaliks may set up castings JVs

By Ishita Ayan Dutt in Kolkata
July 05, 2006 10:59 IST
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Pig Iron producer Tata Metaliks is eyeing strategic partnerships, including joint venture options, for entering the castings business, as a logical step towards diversification.

Sources close to the development said that the company was in discussions with some of the leading manufacturers of castings in the world and was likely to finalise the agreement over the next 8-10 weeks.

There were alternative options before the company like a technological buyout or a technical collaboration but a joint venture appeared to be more probable, at this juncture, said sources.

The export of castings is a lucrative market since sanitary castings and fittings are exported in bulk. The foreign collaboration is necessary since Tata Metaliks is looking to foray into manufacture of superior category of castings.

The company is already in the process of acquiring more land adjacent to its current plant at Kharagpur in West Bengal. The additional land will be used for the company's steel making facility. Tata Metaliks has asked for 315 acres of contiguous land in Kharagpur, to be used for producing billets.

However, sources said, the castings project would require more land than what the company had asked for.

Tata Metaliks has also evinced interest in Iisco's Kulti Works. Apart from the plant and machinery, the bid also includes factory land of 218.5 acres, which could be used for the new venture, if the company bags the unit.

Tata Metaliks is also exploring backward integration options and efforts are on to acquire iron ore and local sources near plant location.

The move to diversify is in tandem with the company's target of achieving a turnover of Rs 2,500-2,800 crore (Rs 25 to 28 billion) by 2011. At present, the company's turnover is around Rs 441 crore (Rs 4.41 billion).

The existing production capacity of 3.26 lakh tonne of hot metal at Kharagpur is expected to double, once all three furnaces at the recent acquisition, Redi plant were operational. This would make Tata Metaliks theĀ  world's largest producer of foundry grade pig iron and would double its topline.

However, Tata Metaliks is consciously moving away from being a one-product company. The objective is to insulate the company's prospects from market turbulence and diversify the risk portfolio.

The surplus of pig iron in the global market, led by China had weakened the market price of pig iron. The excess supply of pig iron in the domestic market had impacted negatively and posed a challenge to the company's growth prospects.

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Ishita Ayan Dutt in Kolkata
Source: source
 

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