Philips Carbon Black plans overseas acquisition

KOLKATA: Phillips Carbon Black (PCBL), an RPG Group company, is weighing the possibilities of acquiring a carbon black plant abroad. Countries being looked at include Japan, Sri Lanka and Vietnam. PCBL has already firmed up plans to manufacture carbon black in a country where it has a large client base.

Choice of the country along with the pros and cons of setting up a green field project vis-à-vis acquiring an existing unit, are currently being examined. A final decision on the mode of creating a base at the desired location, as well as fund-requirements will be arrived at in the next six to nine months.

“A large proportion of PCBL’s products are sold in Japan, Sri Lanka and Vietnam. Other countries include Indonesia and China. The company exports about 25% of its production,” S Sahgal, managing director of the company, told reporters at the sideline of its 45th AGM in the city on Friday.

Back home, PCBL is betting on a Rs 1,000-crore turnover for ’06-07. In ’05-06, sky-rocketing feed stock prices and a depreciating rupee forced it to go into the red. At gross sales of Rs 825.5 crore, its loss after tax stood at Rs 15.07 crore against a profit of Rs 12.36 crore in 18-month period ended March ’05.

“The main hurdle towards getting back on the track, was passing on a portion of the increased raw material prices to the end users. Last year, we had to absorb a substantial portion of the hike in input costs. Lately, however, we have been able to realign product prices favourably across all categories,” said Mr Sahgal.

Additionally, the company has decided to adopt rupee hedging techniques with help from experts so that an unfavourable sway in the rupee does not affect its bottomline in the future.

“The result of these efforts are already started showing. PCBL registered a marginal Rs 14-lakh profit in the first quarter of the current fiscal. In the previous corresponding period profit was Rs 2.31 crore. Turnover for the quarter stood at Rs 256 crore against Rs 197 crore in the previous quarter,” he said.

Meanwhile, it has decided to set up a 30MW power plant at Durgapur in West Bengal. Investment for the plant would be about Rs 110 crore. “PCBL’s existing manufacturing unit in Durgapur will consume only about 5MW, while the rest at 25MW would be fed to the grid,” said Mr Sahgal.

“Financial closure for the plant is likely to be completed by September-end this year, and the unit is scheduled to commence generation by middle of ’08. This will also jack up its bottomline by a decent amount,” he said.