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Our Bureau

Mumbai Nov. 19 Ess Dee Aluminium Ltd, a manufacturer and supplier of aluminium foils and PVC-based primary packaging products, on Wednesday announced acquisition of about 85 per cent stake in the ailing India Foils Ltd (IFL), a Vedanta Group company.

As part of the deal, Ess Dee and Vedanta-owned Malco, which owns IFL, will revive the ailing firm according to the rehabilitation scheme approved by the BIFR. The two companies are infusing Rs 261 crore in IFL, which was declared sick in 2006, with Ess Dee’s share being around 85 to 90 per cent and the remaining to be with Malco. The Rs 261-crore infusion, in the form of equity and preference shares, will help repay all outstanding debt IFL has with various lenders, thus making it totally debt free.

IFL, engaged in manufacturing, processing and selling of aluminium foils and other foil-based products, has thus become a subsidiary of Ess Dee. Vedanta’s decision to sell out its majority stake in IFL is prompted by its decision to remain in its core business of metal production and mining.

Mr Sudip Dutta, Chairman and Managing Director of Ess Dee Aluminium, said with the IFL acquisition, the company’s production capacity will now increase from 18,000 tonnes to 37,000 tonnes within a year. IFL has three plants in and around Kolkata, two of which have been shut down. Ess Dee, through its subsidiary, has five plants across India.

Mr Dutta said the acquisition will help Ess Dee to bring in additional capacities at a time when it was on the verge of launching innovative and new anti-counterfeit packaging products, especially for the pharma industry. It has been in talks with pharma majors on ideas for such products, but was not being able to commercialise them due to lack of capacity.

IFL, which at one time was a major player in the packaging segment, fell out in the race as it had taken up significant capital and technological infusion some years ago, when actually the industry was not in a position to absorb this. Also, its failure to set up manufacturing units outside West Bengal for quicker delivery was another reason for its woes.

“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,” Mr Debdeep Bhattacharya, director of the company said.

Mr Bhattacharya said about 50 per cent of IFL’s capacity of 19,000 tonnes will be ready by March next year and the remaining by end of 2009.

More Stories on : Mergers & Acquisitions | Aluminium

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