Nakoda to buy polyester yarn unit in S Korea for $25 mn
Nakoda Ltd, one of the largest manufacturers of fully drawn yarn in India, is planning to acquire a polyester manufacturer in South Korea.business Updated: Mar 24, 2010 21:52 IST
Nakoda Ltd, one of the largest manufacturers of fully drawn yarn in India, is planning to acquire a polyester manufacturer in South Korea. The deal size is expected to be around $ 25 million (Rs 114 crore) and the announcement about the acquisition is expected soon. It will be the first South Korean acquisition by an Indian company in the polyester yarn sector.
“We have identified the target which is in polyester manufacturing and is based in South Korea. On the valuation front, financials and other details, we cannot reveal much as talks are in an early stage,” said BG Jain, chairman and managing director of Nakoda Ltd.
The company had registered net sales of Rs 1,029 crore in 2009 and has a 20 per cent market share.
Jain said mobilising funds will not be a problem as banks seemed favourably inclined towards the deal.
The acquisition will be done through Nakoda’s subsidiary in South Korea. “We were looking for the opportunity in South Korea for long. We formed a subsidiary, Indo Korean Petrochem Ltd, in August to carry out such deals,” said Jain.
Sources said the acquisition is expected to be complete by either the end of 2010 or early 2011.
On why the company went to South Korea instead of acquiring a company in India, Jain said, “Had there been an opportunity in India, we would have acquired it. India is building fresh capacity in textile sector.”
South Korea was the world leader in polyester manufacturing till 1995-96. But after that, many of its polyester manufacturing units shut down.
The South Korean textile market is currently witnessing shortage of value-added products like polyester yarn and a surplus of raw materials. “South Korea has turned into a net importer of polyester yarn as there is a gap in demand and supply of yarn. We aim to fill this gap by entering polyester manufacturing,” said Jain.