To set up bonded abrasives plant in the Yanjiao Province
CUMI to invest $4.9 m to pick up 49 p.c. stake in Jingri Diamond Co.To have two representatives on the five-member Jingri board
CHENNAI: It is a season for courtships at Murugappa Group. First, Parryware Glamourooms Private Ltd. roped in ceramic major Roca of Spain as an equal partner. EID Parry followed this with an announcement of an alliance with Cargill International SA to set up an export-oriented sugar unit in Andhra Pradesh. Now, it is the turn of Carborandum Universal to signal its foray into China through a joint venture route.
Carborundum Universal will invest $4.9 million to pick up 49 per cent stake in Jingri Industrial Diamond Company, a company promoted by the China Engineering and Exploration Bureau (CEEB), to make synthetic diamond.
The Chinese company has an installed capacity of 120 million carat of diamonds.
Jingri Industrial Diamond Company and Hyosung of Korea have together a joint venture Yanjiao Jingcheng Diamond Tools Company Ltd to make cutting tools using the diamond supplied by Jingri Industrial Diamond Company.
Dhanvanth Kumar, Company Secretary, Carborundum Universal, told The Hindu that the funds for the China foray would largely come from internal accruals. Should the need arise, it could also dip into the $20 million ECB (external commercial borrowings) money it had raised recently, he said.
Mr. Kumar said Carborundum had on Wednesday signed an agreement with the CEEB and Jingri to facilitate its entry as a joint venture partner. Jingri would issue fresh shares at par value to Carborundum. Jingri would use the funds thus raised to set up a state-of-the-art 2,000-tonne bonded abrasives plant at a new location in the Yanjiao Province.
This facility would come up in a year, he said. This would eventually house all the operation of Jingri and its subsidiaries, said a company notification on the Bombay Stock Exchange website.
Mr. Kumar said Carborundum would have two representatives on the five-member board of Jingri. Carborundum would depute some of its executives to help Jingri set up the bonded abrasives project. Further, the Indian company would supply the knowhow.
The Murugappa Group's company had also an arrangement to source bonded abrasives from the Chinese joint venture, he said. The consolidated turnover of Jingri and its subsidiaries was about $10 million.
The latest venture follows Parryware Glamourooms' tie-up with Roca of Spain as an equal partner and EID Parry's alliance with Cargill International SA to set up an export-oriented sugar unit in Andhra Pradesh.
Mr. Kumar justified the joint venture route to enter China on the ground that the domestic players knew the local market and rules.