Continental Carbon To Buy Oriental For $20 Million

Sources said the US firm, a subsidiary of China Synthetic Rubber Company of the Koos group of Taiwan, has agreed to purchase both the assets and liabilities of Posh Investments, in which the carbon black division of Oriental Carbon & Chemicals is being transferred, for an all-equity deal of Rs 77 crore.

"The arrangement with the foreign firm is a strategic move on the part of Oriental Carbon & Chemicals to retire debt and focus on its insoluble sulphur business through capacity expansion. Ernst & Young and Khaitan & Co are advising Oriental Carbon in the transaction, " the sources added.

 

Headquartered at Houston, Taxas, Continental Carbon owns and operates production facilities in Phenix City, Albama; Ponca City, Oklahama and Sunray, Texas. Oriental Carbon is controlled by the Jagdish Prasad Goenka group.

Oriental Carbon's move is likely to result in fierce competition in the Indian manufacturers. The Rs 1,000-crore domestic industry is dominated by Phillips Carbon, Hitech Carbon (a unit of Indian Rayon) and Cabot India, a subsidiary of Cabot Corporation of the US.

Phillips Carbon has a major presence with close to half the market share. It has a capacity of 1.75 lakh tonne a year while Hitech Carbon has a 95,000-tonne capacity. Cabot India, which enjoys technical and financial support of Cabot Corporation, had completed an expansion from 38,000 tonnes to 52,000 tonnes.

Carbon black producers have little control over the raw material prices or on the demand position. Carbon black feedstock is imported from Singapore, West Asia and the US because the locally available CBF is of inferior quality. The import duty on CBF has been reduced to 25 per cent from 20 per cent earlier.

Incorporated as Dharuhera Chemicals to produce sulphuric acid, Oriental Carbon & Chemicals acquired its present name and entered the business of carbon black after the amalgamation of Oriental Carbon with itself in 1984.

In 1999-2000, the company's turnover dipped by 14.50 per cent to Rs 104.65 crore from the previous year's Rs 122.40 crore. It incurred a net loss of Rs 3.28 crore against a net profit of Rs 26 lakh in 1998-99. It has an equity share capital of Rs 9.17 crore.