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| Gujarat Foils to invest Rs 350 cr in backward integration |
| Dilip Kumar Jha / Mumbai Sep 29, 2009, 00:53 IST |
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Gujarat Foils Ltd (GFL), the Gandhinagar-based aluminium rolled products manufacturer, is planning to set up a backward integration project with an investment of Rs 350 crore. A firm’s control of its inputs or supplies is known as backward integration. The proposed facility will have a foilstock producing capacity of 75,000 tonnes a year. Talks are in an advanced stage with Fata Hunter of Italy, the technology, plant and machinery supplier, to provide castor route foilstock manufacturing technology, said Vimal Kumar Somani, managing director of GFL.
The target for commencing commercial production is by the end of 2012. Currently, GFL meets its raw material requirement of around 16,000 tonnes of foilstocks through a combination of domestic procurement and imports.
About 6,000 tonnes a year of foilstocks is procured from Hindalco, while Gramco of Bahrain and Russian Aluminium (Russal) supply about 5,000 tonnes and 3,000 tonnes, respectively, of various grades.
With the ongoing expansion project, the company would require about 18,000 tonnes of foilstocks or feedstocks. According to Somani, the company has got a long term supply understanding of 6,000 tonnes with Hindalco, a major foilstocks producer. Until the backward integration project gets commissioned, the remaining raw material requirement is proposed to be met through imports.
Somani said the proposed investment would be met through debt and equity in the proportion of 70:30, for which it is also simultaneously talking with private equity players to meet the fund requirement.
“All major aluminium producers have planned to raise metal production capacity significantly. Therefore, we find a huge opportunity in downstream products, so far left untouched by major aluminium producers. This prompted us to move towards foilstocks production, which entail immense potential,” he said. Owing to globalisation in the industrial sector, the demand has been increasing. Wrapping up ready-to-eat food articles in aluminium foil maintains hygiene, chemical and physical properties and increases shelf life.
Hence, demand in future is also likely to increase, Somani added. India produces about 70-80 thousand tonnes of aluminium foil per annum against its consumption of about 100,000 tonnes. The Rs 5,000 crore domestic foil industry has been growing between 15-20 per cent a year and is likely to continue the growth momentum for at least five years.
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