Heg Set To Link Up With Iranian Co Azarkesh

HEG Ltd a part of Rs 1,500 crore LNJ Bhilwara group, is forging an alliance with Iran-based oil exploration and mining company Azarkesh to set up a manufacturing facility for graphite electrodes in Iran.

"The 18,000-20,000 tonne graphite electrodes facility will be set up under a joint venture agreement between HEG Ltd and Iranian ministry of mines and metals, where the Iranian government will be the major investor. HEG will provide technical know-how," HEG Ltd president R C Surana said.

Declining to disclose the equity structure in the overseas venture, Surana said, "Negotiations are in an advance stage, however, various issues including equity pattern is not yet decided."

 

The world market for steel has picked up after a long lull. The last six months have seen an encouraging rise in demand which necessitates the expansion, Surana said adding that the company would prefer to wait for sometime to see the steel market trend globally before jumping to any conclusion.

Surana also disclosed that the Rs 20 crore deal to acquire a 51 percent stake in Romanian company Eicid-Titu _ one of the largest graphite electrode manufacturing companies owned by the government of Romania_has been put on hold.

The talks were called off due to the recession inflicted Romanian economy and because of some serious disagreements between the Romanian government and HEG over equity holding pattern.

HEG initiated the talk in 1998 with the Rumanian company as the company had reached its saturation stage in manufacturing graphite electrodes from its existing plant in India and an overseas acquisition was then more attractive than a greenfield investment.

However, Surana did not rule out the possibility of resuming the negotiations with the Rumanian company in future. HEG is also planning to enhance capacity from existing 22,000 tonne to 23,000 tones by investing Rs 4 to 5 crore. "The plant capacity will be increased not by expansion but by de-bottlenecking," the company executive director V P Singh told reporter earlier.

He also said that the company is contemplating to increase the price of graphite electrodes in the domestic market by 4-5 per cent. "This will be a sequel of the international price hike of the product by 6-7 per cent announced by major multinational corporations such as Union Carbide and SGL. The inflation will be passed on to the domestic market as well specially when steel industry is on a recovery path," he said.