Diamond Cables may sell 26% to UK firm

A UK-based aluminium company may pick up a 26 per cent stake in the ailing cable-manufacturing company Diamond Cables Ltd, which is headquartered in Vadodara.

The deal will be finalised at Diamond Cables' board meeting to be held on January 8. Diamond Cables officials did not reveal the name of the UK firm.

"The UK firm has already done its due diligence. They will pick up a stake in Diamond Cables shortly. We are open to offer up to a 26 per cent stake. However, at this stage we can not reveal the name of the company," said Amit Bhatnagar, managing director, Diamond Cables.

With the equity participation of the UK company, Diamond Cables has decided to expand its activities in the domestic cables market as at present its focus is only on the industrial cable segment.

"We will soon come up with an expanded dealer base across the country, except the eastern India which is not yet a matured market for branded cables. The equity participation of the foreign company will not only help us to revive our financial health but will also ensure uninterrupted raw material supply. The funds to be pumped in by that company may also be invested for our expansion activities but that will be decided on a later stage," Bhatnagar said here on Monday.

Diamond Cables may also share technical know-hows with its new partner as the company is looking for the exports market.

"So far we have concentrated our exports in Middle-East countries including Dubai and Qatar along with African countries such as Zimbabwe and Namibia. With the new tie-up, we may look for opportunities in other countries also," he said.

Diamond Cables, which reported sales of Rs 83.48 crore in last fiscal, is eyeing for sales of over Rs 90 crore by the end of the current fiscal. It also expects to achieve sales of Rs 212 crore by the end of fiscal 2004-05.

"With export orders worth Rs 32 crore, and orders from BSES (Rs 20 crore) and Gujarat Electricity Board (GEB) (Rs 18 crore), we are hopeful of doubling our business in the next one year. We have placed bids for supplies worth over Rs 1,500 crore which are expected to be matured in the next one year. We are also going to cater to an order of Rs 59 crore placed by the Tamil Nadu Electricity Board (TNEB). More orders are expected from TNEB during the first half of next fiscal," said Bhatnagar.

Diamond Cables reported a loss of Rs 4.5 crore at the end of last fiscal against a loss of Rs 3.2 crore reported at the end of fiscal 2001-02.

Company officials attributed the losses posted by the company to its high-cost debt. The company, which had recently restructured loans secured from a consortium of banks and the Industrial Development Bank of India, expects to save around Rs 5 crore annually from the move.