To invest Rs 150 crore for capacity expansion
Engineering and automobile company Premier Ltd (formerly Premier Automobiles Ltd) is looking at both organic and inorganic routes to grow its engineering division business. The engineering division focuses on machine tools and heavy engineering equipment business. The company’s other business unit is an automobile division which recently launched a compact sports utility vehicle Premier Rio.
“We have drawn up an investment plan involving a capital expenditure of Rs 150 crore in the next three years to expand the capacities of our machine tool unit as well as to set up a greenfield manufacturing facility somewhere in and around Pune to cater to the growing demand for our smaller machines in the domestic market,” Maitreya Doshi, chairman and managing director, Premier Ltd, said. Premier is also looking at the merger and acquisition route in Europe to expand inorganically.
The company is presently evaluating machine tool firms available for acquisition in the range of $30-50 million, Doshi told Business Standard.
“We are actively evaluating a few companies in Germany and Italy. We wish to complete the acquisition in the next one year,” he said. The greenfield expansion and overseas acquisition will be funded from the company’s internal accruals, he said adding it would raise money by unlocking its real estate in Mumbai.
The company presently holds over 200 acres valued at Rs 500 crore in Dombivili in Mumbai and a part of the land will be either sold or developed to raise the necessary funds to fund the expansion plans, he said. Doshi said, the company plans to widen its machine tool product portfolio by focusing on smaller machines priced in the range of Rs 15 lakh to Rs 25 lakh to increase its sales volumes. Presently, Premier manufactures gear cutting machines and heavy machines like vertical and horizontal machining centres catering to the small and medium enterprises in the general engineering segments.
Premier’s heavy engineering business division manufactures components for the wind energy sector, Railways and automobile applications. The company presently serves companies like BEML, BHEL, Tata Motors among others. It supplies components like cylinder blocks to Tata Motors, under chassis components to metro coaches made by BEML; carriers, rotor hubs and starter rings and towers to wind mills among others, Doshi said.
With the expansion of product portfolio, the company aims to increase its turnover of the engineering division from Rs 250 crore in 2010-11 to Rs 700 crore in the next three years, he added.