November 20, 2008

Ess Dee & Vedanta Group will infuse Rs 261 crore in ailing India Foils

Kolkata: 20 November, 2008-Ess Dee Aluminium Ltd, a leading manufacturer and supplier of Aluminium foil-based flexible packaging laminate products, has acquired nearly 90 per cent stake, valued at around Rs130 crore, in Kolkata-based aluminium foils company, India Foils, which is part of the Vedanta group.

"Ess Dee Aluminium and Vedanta group entity Madras Aluminium Company (Malco) have joined hands to revive India Foils. As a part of the rehabilitation plan, we both partners will infuse about Rs261 crore in India Foils in the form of equity and preferential shares, to repay all existing lenders of IFL, thus making it debt-free," Ess Dee chairman and managing director Sudip Dutta said at a media briefing.

Ess Dee and Vedanta will jointly revive the sick company, India Foils in a rehabilitation scheme approved by the Board for Industrial and Financial Reconstruction (BIFR).
Ess Dee will hold around 90 per cent stake and the remaining will be owned by Vedanta's Madras Aluminium Co. The two will plan to make IFL debt free by repaying all its debts with a joint infusion of Rs261 crore, in the form of equity and preference shares.
Dutta, said that for 2008-09, the company will keep growth levels to the same as in the last quarter, and the IFL acquisition will boost the company's rolling capacity from the existing 18,000 tonnes to 37,000 tonnes within a year. An addition 12,000 tonnes capacity will be created by March 2009 and the rest by December next.

Dutta said the additional capacity will also help Ess Dee as it was planning to launch innovative and new anti-counterfeit packaging products, especially aimed at the pharma industry.These new products could not be launched earlier due to lack of capacity, although many pharma companies had shown keen interest in buying the anti-counterfeit packaging.
IFL which was manufacturing, processing and selling aluminium foil and foil-based products has three manufacturing plants in West Bengal and has a foil rolling capacity of 19,000 tonnes, out of which two are shut. The company has a good front-end conversion capacity that enables it to offer value-added products to its customers. With the funds, Ess Dee will now restart two units in the next five months and the third unit some time later.

"This acquisition will also place Ess Dee on track towards achieving self sufficiency in raw material requirements once the foil stock plant at Hoera is restarted. Additions to IFL's manufacturing facilities in West Bengal would raise strength to Ess Dee's successful hub-and-spoke model of manufacturing and printing foil-based products with plants spread across the country," Dutta said.

One of the main reasons for IFL declaring sick in 2006 was its location, as it did not have manufacturing facilities outside West Bengal, which hampered fast delivery as also it made a substantial investment in latest technology when the industry was not prepared to absorb it.
''IFL lost out by location. Now Ess Dee will provide the spoke and IFL the hub, as together our facilities are located at strategic places, this is a primary synergy through the acquisition,'' Debdeep Bhattacharya, director of Ess Dee, said.Vedanta director Tarun Jain said his company was exiting IFL because it wanted to focus on its core business of mining.

With 37,000 tonnes manufacturing capacity in 8 sophisticated plants spread across India and with the addition of 3 plants of IFL, Ess Dee will be India's largest pharmaceutical foil manufacturing company.

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