i Develop Stocks Advisory

Ess Dee to invest Rs 400 cr in India Foils post-buyout India Foils (IFL) is set to become a subsidiary of Ess Dee Aluminium within the next three months. Post acquisition, which is subject to the BIFR approvals, the IFL brand name will be retained and the company re-christened ‘Ess Dee India Foils’. Ess Dee Aluminium on Monday announced that it has signed an agreement with Madras Aluminium Company (Malco) for rehabilitation of IFL. Malco, a part of the Anil Agarwal-controlled Vedanta group, holds 39% stake in IFL. ET was the first to report on Ess Dee’s acquisition of IFL in its February 18 edition. “We hope to get all necessary approvals from BIFR within the next three months. Our target is to start our operations within two of the three units of IFL by July,” Sudip Dutta, chairman and managing director, Ess Dee Aluminium, told ET. “We want to revive IFL’s Hoara plant by investing around Rs 40 crore. I am certain it can be turned around into a profit-making unit. Another Rs 10 crore will be spent on IFL’s only operational unit at Kamarhati,” Mr Dutta added. He said he is yet to take a close look at IFL’s Taratalla unit and will take a call on reviving it in due course. Mr Dutta said the total investment in IFL will not exceed Rs 140 crore. He said the entire investme-nts will be made out of internal accruals of Ess Dee, which has a cash reserve of Rs 200 crore. “We want to take it as a zero-liability company,” Mr Dutta said. As per the agreement, IFL has promised to clear its liabilities of Rs 300 crore to financial institutions. For Mr Dutta, who started from scratch to build up a successful foils business, it is a homecoming of sorts. He came to Mumbai 20 years ago from Durgapur, an industrial town of West Bengal, and joined a foils company with a daily salary of Rs 15. So, it’s only natural he’s excited about making his presence felt in the industrial scene of Bengal. But it’s not going to be a cakewalk. The history of the company has not so far favoured the management. Kolkata-based BM Khaitan group sold it out to the Vedanta group after being unable to turn it around. And the Vedanta group, which has reputation of turning around sick companies, also failed to put it back on the rails. It has an accumulated loss of Rs 250 crore, almost equal to its turnover. “I realise it could be tough. But I am willing to take the risk. IFL will be a test case. If it proves to be a success, we would like to invest in a much bigger way in the state’s manufacturing sector,” Mr Dutta said. IFL’s Kamarhati unit at present has 250 employees on its rolls. The factory also has a reputation of being a hot bed of trade union activity. Over the years, a number of IFL employees have quit to join Ess Dee. Mr Dutta, who runs lean and highly efficient units across the country at Vasai, Daman , Goa and Mumbai, said he will visit the units at least two to three times a month, speak to employees directly and establish a rapport with them. “There will be no room for complacency. To survive, each of us would need to deliver. IFL will only be one of my units. I will thus not be hesitant to take harsh measures, if necessary,” he said. As a BIFR company, IFL cannot be directly acquired from its present owners, the Vedanta group. In a two-step deal, Ess Dee has thus decided to first form a JV with Malco. As part of this, IFL will become a subsidiary of Ess Dee. Within the next ten days, the minimum stipulated period for the partnership to hold, Ess Dee would acquire the remaining stake in IFL.