Mumbai: Engineering firm Batliboi Ltd on 20 June bought a majority stake in French firm AESA Air Engineering to gain access to technology and newer markets, sending its shares soaring.
Batliboi, paid Rs90 million for 70% in loss-making AESA, an Industrial airconditoning maker, chairman Nirmal Bhogilal told reporters.
AESA, now 30% owned by employees, is expected to break even in 2007 on revenue of Rs1billion, up from Rs700 million a year ago, he said.
Batliboi’s shares extended gains to touch a high of Rs118.40 on the news. The shares ended 7.1% up at Rs116 in a firm Mumbai market.
“There were only two big Western firms left in this space and we needed a global footprint,” Bhogilal said. “AESA gives us the brand and the network.” Batliboi makes machine tools, industrial airconditions and sells textile machinery.
AESA competed with Swiss-based Luwa Air Engineering, Batliboi and a few Chinese firms. About 40% of the French firm’s revenue comes from South America and 55% from Asia, he said.
The acquisition would also allow Batliboi to enter segments such as tobacco, paper and glass. “These are fast growing and nearly half of AESA’s revenues come from non-textiles,” he said.
Industrial air conditioning accounted for a third of Batliboi’s 2006/07 sales of Rs3 billion, he said.
Batliboi, Bhogilal said, hoped to recoup the French firm’s accumulated losses of 3 million euros in three years by low cost sourcing from India and China.
AESA is purely a designer and assembler of products, sourcing components from China and Europe, and Batliboi could bring manufacturing to India, he said.
This is Batliboi’s second acquisition in 2007 after Canadian machine tool maker QuickMill, which it bought for Rs220 million in March.