Man Industries to invest $100 million for US pipe unit

14 Mar, 2008, 2027 hrs IST, REUTERS

Steel pipe maker Man Industries India Ltd said on Friday it will set up its first manufacturing facility in the US at a cost of $100 million, to strengthen its presence in that country.

Man said its new plant to manufacture helical submerged arc welded (HSAW) pipes will be set up at Little Rock Port, Arkansas, and will have a capacity of 300,000 tonnes a year. It will also set up a coating facility at the site.

"Based on the growing demand in US, Man is very confident about its future growth opportunities in the country," Chairman R C Mansukhani said in a statement.

In 2007, Man had secured a $225 million order from Kinder Morgan Energy to supply nearly 150,000 tonnes of steel pipes for a gas transmission pipeline. Part of the order is yet to be executed.

"This is a clear-cut arbitrage between the freight cost (of transporting pipes from India), and labour cost in the US," senior vice president K.G. Mantri told Reuters. "We expect significant volumes there."

Man currently operates two plants in western India, with total capacity of 800,000 tonnes a year, which it uses to supply its US customers.

Competitors Welspun Gujarat Stahl Rohren, PSL Ltd and JSW Steel have already set up plants in the US, drawn by rising orders there and huge potential replacement demand from the oil and gas pipeline sector.

Ahead of the news, Man shares ended at Rs 98.35, 1.1 per cent down in a strong Mumbai market.