Manufacturer Of Bulk Material Handling Equipment Looking For Acquisition
Gujarat-based Elecon Engineering Company is looking for a US or an European gearbox manufacturer for an acquisition.
They manufacture bulk material handling equipment, industrial gearboxes and windmill gearboxes. Click here to read more.
Elecon gears up for foreign buy
SRIKUMAR BONDYOPADHYAY
GET, SET, GO
Calcutta, June 23: Gujarat-based Elecon Engineering Company, engaged in manufacturing bulk material handling equipment, industrial gearboxes and windmill gearboxes, is getting ready for an overseas acquisition. It hopes to complete the deal in the next six to nine months.
“We have already started looking for acquisitions in the domestic and overseas markets and have appointed consultants for this purpose,” said Hemendra C. Shah, chief financial officer and vice-president, Elecon.
“We are getting some proposals but have not found a suitable company,” Shah said.
Elecon is keen on an US or an European gearbox manufacturer having an annual turnover of between Rs 350 crore and Rs 400 crore.
In 2007-08, the material handling business booked orders of Rs 1,234 crore, while the gearbox business obtained orders of Rs 400 crore.
“As on March 31 this year, we had a pending order book position of Rs 1,085 crore for the material handling segment business and Rs 202 crore for the gearbox division,” Shah said.
The company’s outstanding order book at the end of March was 1.5 times its turnover (Rs 826.43 crore) in 2007-08.
“During the current financial year so far, we have witnessed strong order inflows. Looking at the trend we expect to book orders between Rs 1,700 crore and Rs 1,800 crore in 2008-09,” he said.
With a bulging order book, the company needs to augment its manufacturing capacity and an acquisition is the easiest and quickest way out.
“We are also expanding our existing capacities both in the gearbox and material handling divisions. In 2007-08, we invested Rs 82 crore in a windmill gearbox unit. In the current financial year, we have earmarked a capital expenditure of Rs 120 crore for expanding capacities at material handling and gearbox facilities,” Shah said.
Given its capital expenditure and acquisition plans, the company may tap the capital market for a second time.
“We’ll have to consider an equity dilution through a second public issue to raise part of the fund we may need for capacity addition and overseas acquisition,” Shah said.
Last year, Elecon had bagged a Rs 378-crore order from the Damodar Valley Corporation.
It also bagged a Rs 188.52-crore order from Steel Authority of India Limited for its IISCO Steel plant.
“The amount of orders we booked last year from the eastern region comprised 47 to 48 per cent of our total orders in 2007-08,” Shah said.