Indo Asian Fusegear to buy two overseas firms

Lighting major Indo Asian Fusegear is planning to acquire two firms in the UK and Germany in a bid to ramp up its international presence.

V P Mahendru, chairman and managing director, Indo Asian, said that both firms were Rs 25 crore companies manufacturing switchgears. Indo Asian will decide on the acquisitions in 2-3 months.

With the European market witnessing a sluggish growth and production costs rising, electrical product manufacturers in Europe have suffered a setback.

Indo Asian will provide the components, restructure operations, thus reducing production costs, and use its presence in Middle East, south Asia and Africa to expand the market base of these companies.

The company exports compact fluorescent lamps and switchgears to UK, Italy, Germany and Spain at present.

Indo Asian is investing about Rs 71 crore in setting up three new units at Haridwar. While the wires and cables manufacturing unit will be operational by December this year, the other two units to manufacture lighting products, including outdoor lighting products following the JV with Nordex this September, and switchgears will be ready by March 2006.

Once the new units are upstream, the company's existing units at Noida, Parwanoo and Murthal will cater only to the export markets, said Mahendru.

Indo Asian's exports presently contribute 20 per cent to its turnover. It exported products worth Rs 12 crore in 2004-05 and is expected to rake in Rs 50 crore worth of exports this fiscal. Mahendru said the company expects exports to touch Rs 100 crore in 2006-07. Indo Asian is expected to post a turnover of Rs 200-225 crore this fiscal, up from Rs 105 crore in 2004-05.

The company's domestic expansion plans are being funded through internal accruals and debt equally. It might consider raising funds for its overseas acquisition plans, Mahendru said.

The company recently signed an $8 million project to manufacture electrical and lighting products in Saudi Arabia.

Indo Asian will be the technology partner and 20 per cent equity stakeholder in the project.

The plant, which will be operational by 2006-end, will manufacture compact fluorescent lamps (CFLs) in its first phase of operation and later produce switchgears and other electrical products. Indo Asian will provide raw materials, machinery and technical expertise, Mahendru said.