McNally takes over Sayaji, eyes overseas acquisitions

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Saturday , May 17, 2008 at 0218 hrs McNally Bharat Engineering Co Ltd, a Williamson Magor group company, has taken over Sayaji Iron & Engineering Co Ltd by acquiring the entire controlling stake of 68.28% for Rs 59.01 crore at Rs 221.60 per share. The company will make an open offer on May 20 for another 20% stake.

Deepak Khaitan, chairman, said McNally was looking for overseas acquisitions as well as part of its aggressive growth strategy.

He said McNally, currently having 90% of its turnover from 13 projects, was enhancing its equipment manufacturing business aiming a better margin from it.

The Sayaji acquisition will help in bettering margins as the entire range of crushers it manufactures at its plant in Vadodara earns margins of 25% as against McNally's margins of 7-8% in all category of equipment it makes at its two plants in West Bengal.

Besides other equipment, McNally has been making high-end crushers. But after the acquisition, it would have the entire range of crushers in its portfolio, Khaitan said.

Sayaji is expected to achieve a top line of Rs 62-63 crore this fiscal with earnings before interest, taxes, depreciation and amortisation (EBIDTA) of around 20% and profit before tax of around 17%.

McNally, Khaitan said, registered a provisional turnover of Rs 600 crore in 2007-08, of which Rs 540 crore came from its projects. This would double next year in view of orders worth Rs 2,300 crore already booked and the bigger volume of manufacturing after the acquisition.