IMFA buys 70 pc stake in Indonesian coal firm

New Delhi: Indian Metals and Ferro Alloys (IMFA), the largest producer of ferro chrome in the country, on Monday said it has acquired 70 per cent stake in an Indonesian coal company for USD 8.75 million (about Rs 39 crore).

"We have completed the acquisition (of the Indonesian coal firm) and we hope to start operations there in late 2012," IMFA Managing Director Subhrakant Panda told PTI.

While declining to name the acquired company, he added that IMFA is yet to carry out a detailed assessment of its reserves and required infrastructure to sustain operations there.

"It has a coal mine in East Kalimantan district of Indonesia but it is not possible for me to tell you the name, its reserves or the proposed investment right now. We are yet to do a detailed assessment," Panda said.

The acquisition has been made through IMFA`s Singapore based subsidiary, Ind Met Mining Pte Ltd and the detailed assessment will be completed in 6 to 8 months, he further said.

Talking about the results of April-June quarter, Panda said that company`s profitability got affected due to rising prices of thermal coal, which is used as raw material in ferro chrome production. The ferro chrome is used for making stainless steel.

The company posted a net profit of Rs 37.42 for April- June 2011, a decline of over 31 per centover the same period of 2010-11.

Net sales of the company, during the quarter, went up by 10.46 per cent to Rs 260.41 Corey vis-a-vis Rs 235.73 crore reported during the Q1 of 2010-11.

The IMFA has a ferro chrome production capacity of 2,75,000 tonnes per annum, of which over 80 per cent gets exported to China and other East-Asian companies.

The Orissa-based company also operates five furnaces for its ferro chrome productions and recently, it had signed a joint venture agreement with South Korean firm Posco for setting up the sixth furnace, in which it has divested 24 per cent stake for USD 5 millions.

This would boost its installed capacity of ferro chrome by 40,000 tonnes per annum, the company had said earlier.

The IMFA, which has 108 MW captive power generation capacity, also has plans to expand it to 258 MW by March, 2012.

Besides this, the company is developing a captive coal block with 123 million tonnes of mineable reserves through a special purpose vehicle, Utkal Coal.

Shares of the company closed today at Rs 473.95 apiece on the Bombay Stock Exchange, down 0.22 per cent from the previous close.