MUMBAI, Nov 23: Saw Pipes Ltd, a part of the Jindal group, is set to go ahead with its second overseas acquisition in the United States. The company is acquiring a one-million-tonne plate-mill facility at Baytown in Texas from US Steel Corp, a part of the US X Corporation.

The plate-mill facility is reportedly a part of the company's backward-integration plans.

Earlier, the company had acquired a submerged arc-welding pipe manufacturing plant from the same company. A formal announcement of the acquisition is expected to be made on Monday.

The saw-pipe manufacturing unit has a capacity of 0.5 million tonnes per annum, which is owned by Saw Pipe US. The Jindals hold a 19 per cent stake in the company.

Significantly, owing to poor capacity utilisation in the Texas-based unit of Saw Pipes, the Jindals had planned to take over the company for dismantling and transporting the plant to Goa to cater the domestic and neighbouring markets. The company had planned to fund it from the proceeds of its proposed $50-million GDR issue.

However, Jindals shelved the plan as the company's GDR issue did not receive the kind of attention that was expected.

Further, the company decided to add more capacity to the Kosi Kalan plant at a cost of Rs 30 crore for catering the domestic and neighbouring markets. The group is also believed to be planning a joint venture for the marketing its product in North America.

The decision on the part of the steel company is believed to have been taken in the wake of the poor market conditions on the domestic front and a relatively better condition in the American markets.

This is evident in the Saw Pipes' financial results for 1996-97, which shows a 13.7 per cent slump in the net profit. The company's net profit for 1996-97 was Rs 40.59 crore as compared to Rs 47.04 crore in the previous fiscal.

The gross turnover of the company in 1996-97 has shown a fall of 5.35 per cent as compared to its performance in 1995-96. In the last financial the company had recorded a turnover of Rs 474.54 crore as against Rs 501 crore in 1995-96.

The company's gross profit has also fallen from Rs 62.46 crore in 1995-96 to Rs 55.10 crore.

The company's high finance charges also ran high during the last fiscal for which it raised a foreign currency loan worth Rs 63 crore to replace a significant portion of high cost rupee loans.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.