Anglo-Indian group LNM has boosted the turnover of steel plant Ispat Sidex Galati by another approximately one billion dollars this year. The plant expects its revenues to double in dollars to $2.1bn (1.6bn euros).
Apart from the steel plant, there is the $250 million of operations by the other subsidiaries of Ispat in Romania - Tepro Iasi, Petrotub Roman and Siderurgica Hunedoara - meaning that the Indians have built up the largest business portfolio in Romania, comparable to Petrom.
Narendra Chaudary, Ispat Sidex CEO, expects revenues from the other three subsidiaries to double in 2005 to a total of $500 million.
The privatisation of Sidex in 2001 was seen as the closing of a "black hole" in the Romanian economy, which was making losses of one million euros per day of operations. Now the plant in Galati is the largest trading company in the country, according to LNM Group representatives.
Ispat Sidex came into the black in 2003, when it logged $100 million (88.3 million euro) in net profits. It expects net profits to be even higher this year.
"Sidex is the largest trading company in Romania, accounting for 3% of Romania's Gross Domestic Product, 4% of its industrial output and 5% of its exports," said Narendra Chaudhary.
"We successfully overcame the difficult situation the company was in at the time of privatisation with the help of a firm management approach, a suitable investment programme and the synergies inside the LNM group. We were able to benefit from the significant potential of the company, from its favourable geographic location, high production capacities and skilled personnel," Chaudhary explains.
The strong growth of the business of the plant in Galati this year was also boosted by the increase in the steel price on the international markets, as well as by the rising demand on Asian markets. Sidex exports about 65% of its output and has been able to take advantage of this favourable situation due to the fact that its production capacity has been constantly increasing.
From 3.7 million tonnes of steel in 2001, Sidex moved to an output of 4.6 million tonnes in 2003 and forecasts approximately 5 million tonnes for this year.
Sidex Galati was privatised in November 2001 when LNM took over 92% in the company from the Authority for State's Interests Privatisation and Administration (APAPS) in a deal worth more than $500 million, which included the actual share price and the investment commitments.
LNM committed to invest approximately $351 million over the next ten years and to come up with a working capital of some $100 million. Payment for the stake held by the state amounted to $70 million.
At the time the takeover took place, Sidex had $160 million in net debts to creditors, $26 million in overdue debts to banks and huge debts to the utility companies.
adrian.mirsanu@zf.ro
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