Fully drawn yarn segment manufacturer Nakoda Ltd, a Surat based company has signed an asset purchase agreement with South Korean polyester fiber manufacturing firm, Kyunghan Industry Company Ltd. for acquisition of their entire manufacturing facilities at Kyunghan. Nakoda Ltd. has announced an investment of $ 40 million for acquisition of the South Korean manufacturing plant through its subsidiary Indo Korean Petrochem Ltd.
According BG Jain, chairman and managing director of Nakoda Ltd., the company will have benefit from the plant's strategic location in the industrial hub of synthetic fiber manufacturing in South Korea. Post acquisition, Nakoda Ltd. is expected to enjoy easy availability of raw material, abundance of power, technocrats, skilled manpower and sophisticated infrastructure.
Talking about the acquisition, Jain said, "This marks our entry into new geographies. We plan to work collectively to close similar deals in future to expand our network across the globe. We have bought the plant and machineries only whereas the land and buildings are leased making the venture economical for us."
South Korea provides considerable opportunity for polyester industry of surplus raw materials in terms of PET and MEG on one hand and heavy dependence on imports of partially oriented yarn (POY) for meeting the domestic demand on the other. "The entire production of the Korean venture will be easily absorbed in the South Korean market and would also be substituting imports. Over and above this, Nakoda will enjoy a distinct edge due to very low capital cost per ton compared to its peers in South Korea. The domestic polyester industry in South Korea looks healthier after the imposition of anti dumping restrictions on Chinese polyester products. Cumulative impact of all the above mentioned favourable factors would translate into a quick pay-back period of less than two years," Jain added.
Meanwhile, Nakoda is also contemplating further investments of over Rs 1,500 crore to raise the capacity to a level of 5,00,000 MTPA in India and for future overseas acquisitions.
