Nakoda goes global, acquires a Polyester Plant in South Korea

By Representative:
Ahmedabad: Nakoda Ltd. (BSE Code:521030) one of India's largest players in the fully drawn yarn segment, announced that it has signed an Asset Purchase Agreement with Kyunghan Industry Company Ltd. for acquisition of their entire manufacturing facilities located at Kyunghan in South Korea through its subsidiary Indo Korean Petrochem Ltd. The total capital investment for the Korean Venture would be USD 40 mn.

Kyunghan is strategically located in the industrial hub of synthetic fiber manufacturing in South Korea with good connectivity to Seoul and Busan which is the third busiest port in the world. The company will have benefit of easy availability of raw material, abundance of power, technocrats, skilled manpower and sophisticated infrastructure.

South Korea provides huge opportunity for Polyester Industry as there is a unique situation of surplus of raw materials - i.e. PET/ MEG on one hand and heavy dependence on imports of 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 in fact it would be substituting imports. Over and above this, the company will enjoy a distinct edge due to very low capital cost per ton compared to its peers in South Korea. 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.

"This acquisition 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" said Mr. B. G. Jain, Chairman & Managing Director, Nakoda Ltd.

Nakoda, an ISO 9001 - 2000 company, is one of the prominent players in the Polyester Filament Yarn Industry in the country. From a modest capacity of 354 MTPA in 1986, Nakoda grew to 50,000 MTPA capacity company by 2008. With the completion of its ongoing backward integration/expansion/forward integration project with a capital outlay of Rs 333 Cr, Nakoda will achieve a capacity of 1,40,000 MTPA by August/September, 2010. Nakoda is contemplating further investments of over Rs 1,500 Cr to raise the capacity to a level of 5,00,000 MTPA in India and for future overseas acquisitions.

Nakoda ranks amongst top 500 in Indian companies according to the research carries out by Business India as well as Financial Express.