Hyderabad: IVRCL Infrastructures & Projects Ltd, the Hyderabad-based infrastructure major, is poised to go on an acquisition spree and pick up three companies in the construction, power transmission and engineering space.
It has set aside $150 million (Rs615 crore) to fund its inorganic expansion.
“We have a lot of options coming up. We are looking at a construction company in Hungary with a good order book in hand. We are also looking at a small company in West Asia with operations in Dubai and Oman, which sets up the power transmission lines for all the big companies there. It has synergy with our operations. The promoters of both these companies want to exit,” said S. Ramachandran, deputy director of development and corporate strategy, IVRCL.
While IVRCL is looking at overseas companies for the construction and power transmission business, it is also perusing a South India-based engineering company with 200 engineers.
“We are also looking at a pure engineering company with capability and a set of people. We can use it by merging it with our subsidiary company Hindustan Dorr-Oliver Ltd, which itself is an engineering company, thereby strengthening it,” Ramachandran added.
IVRCL’s?turnover for 2006-07 was Rs2,518 crore and its net profit Rs168.9 crore.
Arvind Mahajan, executive director at audit firm Ernst & Young, said, “The companies that are trying to transform themselves from the earlier growth path to a more aggressive growth trajectory will have to meet the key requirement of building capabilities in the relative businesses. This is not easy through organic means as it requires time and effort. An aggressive company can build it through acquisitions.”
The company also wants to establish its presence in the hydrocarbons exploration and production space in the country, and as part of this, IVRCL is also in the race with other Indian and overseas firms to acquire an American onshore oil rig company, as reported in Mint on 30 May.
“International acquisitions should be used to strengthen domestic capability by creating an integrated company. This can help in cost reduction by leveraging the international technology and sourcing the human capital from India. The challenge is to execute such a high-risk task. A strong integrated company requires strong management capability. For IVRCL, it is a good thing from the growth perspective, but challenging from the integration perspective,” KPMG’s Mahajan added.
The IVRCL stock gained 1.3% on Monday to end at Rs347.45 on the Bombay Stock Exchange (BSE), while the benchmark Sensex ended flat at 14,083.41, gaining 19.6 points. The stock has recorded a year’s high price of Rs460 and a low of Rs164 on BSE.