Kolkata-based Stone India Ltd wants to acquire a European company to enter the overseas market for railway components.
The locomotive parts maker is likely to close the deal by the month end, said Amitava Mondal, chief executive and managing director, refusing to divulge further details.
“The company is in final stages of negotiations for buying a company that makes components used by railways,” Mondal said.
He said a special purpose vehicle will be formed by the ‘founders of Stone India’ to buy the assets of the European firm. Bank finance would also be used for funding the buyout.
Stone India exports brakes used by railways to New Zealand , Africa , Vietnam , Tanzania and Mozambique .
The company, which supplies mainly to the ministry of railways, is investing Rs 30 crore in 2008-09 to mainly fund its greenfield project in Nalagarh in Himachal Pradesh.
The project, scheduled to be operational soon, will manufacture elector-mechanical, electrical and electronic components like pneumatic suspension, computerised brake system, end of train converter, fall diagnostic and control system and microprocessor-based locomotive control system.
It has already got clearance from the Research Design & Standards Organisation for some of the products.
The company, with an order book size of Rs 80 crore, is eyeing a turnover of Rs 120 crore in 2008-09, significantly up from Rs 9.2 crore last fiscal. However, the company is expecting its operating margins to be at 17%, down from 24% in 2007-08 owing to increase in steel prices.
