SVGZ to secure 60% of castings from Czech plant

Integrated Rail-Casting, owned by Ukrainian businessman Konstantin Zhevago, acquired a 100% interest in Czech steel castings producer CKD Kutna Hora after a Prague court approved its EUR 19.1 mln financial recovery plan, Kommersant reported yesterday. The other candidate to acquire the plant, Russian Rail Group, said it would appeal the decision.

Roman Dmytrenko: While Zhevago’s victory may not yet be final, we believe the market will react positively to the news of the significant increase in secured casting supplies for Stakhaniv Wagon (SVGZ UK). We estimate the Czech plant can supply enough casting parts every month for up 450 railcars produced by Stakhaniv. Even though supplies from Kutna Hora can potentially cover only 60% of Stakaniv’s demand, it will make the company more sustainable in terms of spare parts supplies compared to other Ukrainian railcar producers, will allow the company to avoid a castings deficit and not cut its output in 2012 as Russia temporarily suspended the quality certificate of its current primary supplier, Kremenchuk Casting, at the beginning of February.