Process equipment maker GMM Pfaudler on Tuesday acquired the manufacturing plant of heavy engineering firm HDO Technologies near Ahmedabad in a liquidation sale for a cash consideration of Rs 58.5 crore.
The former is looking to shift its heavy engineering equipment business to the newly acquired plant and reserve its existing facilities exclusively for the glass-lined equipment business.
“This is a very timely acquisition as we were running out of capacity,” Tarak Patel, managing director of GMM Pfaudler told ET. “We got the asset a quite a good price and have enough capacity now for the next five years,” he said.
The acquisition will be funded through debt. The transaction is expected to be completed by 30 April and the plant is expected to be operational over the next 9 months.
The plant has enough capacity to handle up to Rs 500 crores of annual heavy engineering equipment business. GMM Pfaudler’s heavy engineering business is currently about Rs 100 crore annually, Patel said.
The manufacturing company is utilising about 90% of the capacity at its Karamsad and the recently-acquired Hyderabad plants. With the moving out of the heavy engineering business, it will have sufficient capacity to double the glass-lined equipment business which is seeing increased demand from the pharmaceutical and chemicals industries as companies look to move away from China.
GMM Pfaudler, which recently acquired a majority stake is parent Pfaudler Group for $27.4 million, is looking for more acquisitions internationally, Patel said.
Source: Economic Times