RHI Magnesita will acquire the Indian refractory business of Dalmia Bharat Refractories Limited (DRBL), Dalmia OCL (DOCL), for around Rs 1,700 crore in a move to strengthen its presence and offer in key growth markets.
Post the acquisition of Dalmia and Hi-Tech’s refractory business, the company’s market share is expected to go upto 33-34 percent versus its earlier market share of 22-24.5 percent.
“Before taking over Hi-Tech, the market share of the company was 22 percent and after Hi-Tech it was 24.5 percent and with this deal, it will reach 33-34 percent,” said Parmod Sagar, MD and CEO at RHI Magnesita India.
With this acquisition, the debt of RHI Magnesita India will be around Rs 1,300 crore and the management reckons that the debt-equity ratio will still remain at 1:1.
RHI Magnesita has kept aside roughly Rs 200 crore for the modernisation of the Dalmia Bharat Refractory business which will be spent in the next four-five years.
“We believe that the steel industry will keep on growing at 7-8 percent compounded annual growth rate (CAGR) in the coming 6-7 years’ time,” he said.
The current capacity utilization of the company is around 55-60 percent and it will be ramped up. Sagar expects the margins to be in the range of 15-16 percent by FY24
For the full interview, watch the accompanying video
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