Sterlite will rule aluminium foil market with IFL takeover - Views on News from Equitymaster

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  • Dec 8, 1999 - Sterlite will rule aluminium foil market with IFL takeover

Sterlite will rule aluminium foil market with IFL takeover

Dec 8, 1999

The Sterlite group has acquired 55% equity stake in India Foils for nearly Rs 500 m. This was revealed in a leading business daily. Sterlite Industries (FY99 Sales Rs 11.1 bn) is into the manufacture of copper (67% of turnover) and the telecommunication cables. The company manufactures jelly filled cables (22% of turnover), optical fiber telecom cables (3%), optical fiber (2%) and aluminium (6%).

India Foils Ltd. (IFL) will issue fresh equity to Sterlite, which will see a decline in the holding of its original promoters - B. M. Khaitan -led Williamson Magor group from 60% to 27%.

IFL's takeover will give Sterlite access to the value-added aluminium foil segment, which until now was the preserve of Indal. The IFL acquisition will ensure that it grabs an unassailable lead in the aluminium foils segment with 60% market share, leading Indal by a huge margin. The local aluminium market is witnessing growth in excess of 10%.

In addition to higher market share, Sterlite will get access to IFL's wide client base. The latter's distribution network will also come in handy.

Market View:
The stock has been rated as a 'BUY' mainly on account of the improving demand scenario emerging after large orders, totaling 33.3 m cable km, already having been placed with cable companies.

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