Chennai-based water and waste water management company VA Tech Wabag Ltd is looking for overseas acquisitions of around Rs 1,300 crore to improve its growth momentum.
The company has shortlisted a few target companies for acquisition and would enter into due deligence soon, said S Varadarajan, chief financial officer, VA Tech Wabag Ltd.
“It would be a medium sized acquisition. We have a vision to become a Rs 6,000-crore company in the next five to six years, and almost 20-25 per cent of the growth is expected to come from inorganically,” he said.
The targets for acquisition were in the fast-growing markets such as China, Middle East and North Africa. The plan is to either improve penetration in these markets or to bring in new technology.
The company has identified sea water desalination and water re-use as major technologies for expansion in future and the acquisition could be in line with this. It has a cash balance of around Rs 350 crore and it could leverage other means to fund the acquisition, if the situation requires, he added.
At present, the company has presence in regions including North Africa, Middle East, Central and Eastern Europe, South East Asia, China, apart from India.
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In the BOOT (Build, Own, Operate and Transfer) projects, it is expecting financial closure of a Rs 700-crore project at Ulhasnagar in Mumbai and another Rs 150-crore project at Aurangabad in Maharashtra, for which it has signed Letter of Intent (LoI) in the last quarter of 2010-11. It is also working on some overseas projects in the segment.
The company is working on a pipeline of Rs 2,000 crore BOOT projects, which have not reached the LoI stage. However, the company would not be aggressive in investing in BOOT projects while increasing its partnership in such projects, said Varadarajan. It has entered into collaboration with Japanese firm Sumitomo to bring in investments for the segment.
VA Tech Wabag has an order book of Rs 3,400 crore as on March 31, 2011. It has a backlog orders of around Rs 2,400 crore in India.
It is expecting a growth of 20 per cent in backlog of order book in India by the end of the current fiscal.