Voltas Ltd, the engineering services company of the Tata Group, is on the lookout for acquiring companies in India and overseas with a view to expand its presence in the water treatment and hydrocarbon segments.
?We are looking to make a few small-scale acquisitions in the range of Rs 100-200 crore in the water and hydrocarbon segment. We are actually looking at companies which can provides us pre-qualification in certain industrial segments like water and hydrocarbon, which are very attractive,? MM Miyajiwala, executive vice-president (finance), Voltas Ltd, told FE.
The company will be looking at overseas acquisitions in the water treatment segment whereas domestic acquisitions will be preferred in the hydrocarbon space.
?We are seriously looking at expanding our reach in the international market in the water treatment segment, since we are looking at margins of about 8-9%, ? said Miyajiwala without disclosing too many details.
In August 2008, Voltas acquired a 51% stake in Mumbai- based Rohini Industrial Electricals for Rs 62 crore. The company is looking at a similar acquisition and will fund those acquisitions from its internal accruals.
With total sales of about Rs 2,800 crore as on December 2009, Voltas reported a flattish topline growth in the third quarter due to slow execution of projects from some of its clients.
The company?s reported profit after tax increased by 85.8% y-o-y to Rs 76.5 crore owing to margin expansion and profits on sale of property (Rs 9.35 crore). Voltas Ltd?s shares on Thursday slipped 1.84% to close at Rs 159.80 on the Bombay Stock Exchange.
The company?s electro-mechanical projects and services, which contribute to about 65% to its topline currently, have an order book of about Rs 3,900 crore at present.
Voltas is expecting to bag more orders in this segment, especially from the West Asian countries, Singapore and Hong Kong.
According to BofA Merrill Lynch report, Voltas is likely to end its six-quarter-long drought in new order inflow from the West Asia with projects worth about Rs1,500 crore by March 2010.
The company aims to leverage its strong clientele in Abu Dhabi and Qatar to bag new contracts, the report adds. It also points out that going ahead, the company may bag fewer projects owing to increase in competition and sharp decline in oil prices that could hit the West Asia economies adversely. However, Miyajiwala is hopeful of adequate new order flow in the next few months. Voltas offers engineering solutions for industries in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, machine tools and mining & construction equipment.
