Indian steel pipemaker to acquire logistics firm

Steel pipemaker Jindal Saw is in talks to acquire a logistic firm that operates container trains and owns terminals for about US$33.33 million and expects to close the deal in three months.


“We are planning to acquire a company in this space which has terminals at critical locations. At that level, we would probably become India's only multimodal logistics company that has its own terminals, its own rail operations and also has ships," Indresh Batra told Reuters.


India allowed private firms to run container trains about five years ago encouraging several private operators to take the plunge, but a global downturn that soon followed didn't let the private firms settle in as trade shrank and volumes dropped.


Jindal Saw has a small presence in the logistics space at present through its unit Jindal ITF that runs eight vessels and three barges around the Indian coast, but is aiming to ramp up its presence quickly through an acquisition.


A deal will give it the ability to use rail to transport goods and inland depots to warehouse them, Batra said, adding it doesn't intend to be a large shipping company but may own ships or tie up with other shippers to transport goods to Asian countries.


Jindal Saw is betting on the power sector, whose massive growth would also necessitate huge coal movement. A rising manfacturing sector in India would boost business scope for logistics firms, Batra said.


Jindal ITF also operates in urban water and waste management business and expects to gross about $199.98 million in revenue in 2011/12.


Jindal Saw sees 30 percent sales growth in pipes business on strong demand emerging from the US and other countries that are laying pipelines to transport oil and gas, and many cities that are preparing to give its residents a better water and waste management systems.


"All our investment are in the core sector where demand for pipes, be it oil and gas pipes, seamless pipes or water and sanitation driven pipes, is rising because there is a fundamental investment that is happening," Batra said.


The company's order book as at February-end was at $1.33 billion, with more than half of that from overseas. The unrest in the Middle East has had no impact on the company as its business is mainly spread in Iran, Iraq and Saudi Arabia, Batra said.
(Source:http://www.cargonewsasia.com)