Srf In Worldwide Acquisition Drive

The Arun Bharat Ram-controlled SRF Ltd has embarked on a global acquisition spree to emerge as the third-largest player in the world in the tyre cord sector by 2004-05, company executives said here yesterday at a meeting to announce the company's annual results.

SRF is currently in takeover talks with its ailing competitors in India and companies in Thailand, Singapore and Europe.

In order to emerge as the third-largest tyre cord manufacturer, the company will have to increase its capacity from 42,000 tonnes to 70,000 tonnes a year. Initially, a target capacity of 50,000 tonnes had been fixed for 2001, Arun Bharat Ram, vice-chairman and senior managing director of SRF said.

 

Indicating that the company was out of trouble now, Bharat Ram said acquisition was the cheapest way to the goal. "The cost of production is around Rs 5 lakh per tonne. And we can acquire capacity at a fraction of this cost," he said.

Bharat Ram added that the complete acquisition of DuPont Fibres Ltd had cost the company only Rs 21 crore last year. The new company has been christened Tyre Cord Fabric Ltd. SRF is investing Rs 12 crore this year to expand the capacity of the DuPont plant.

He said the acquisition was almost zero cost as the company would get a tax-shield for the book losses of DuPont Fibres Ltd.

Over 21 per cent of SRF's sales come from the international market. The company has set up a greenfield plant in Dubai at the cost of Rs 120 crore.

The company's fluorocarbon business accounts for 21 per cent of its total turnover. The company will be getting Rs 45 crore under the Montreal Protocol Fund to phase out chloro-fluoro carbons (CFC) in refrigerant gases. SRF Ltd's managing director Ravi K Sinha said the company would be looking for alliance partners for its polyester film business. Meanwhile, SRF Ltd has recorded a 97 per cent spurt in net profit for the year ended March 31, 2000. The company has posted a net profit of Rs 26.8 crore in fiscal 2000 against Rs 13.5 crore recorded a year earlier. Bharat Ram said the net profit would have been much higher this year had it not been for a non-performing assets (NPA) provision of Rs 32.01 crore for the year.