Virgo Engg plans acquisitions abroad

City-based flow valve manufacturing company Virgo Engineers Ltd has plans to acquire overseas units and enter businesses.

The expansion and acquisitions will be financed partly by a $10 million infusion from Private Equity firm Tano capital.

The deal, advised by Mumbai-based Enam Financial Consultants, will give Tano an equity stake close to 10 per cent. But, the companies did not disclose the exact percentage of equity or company valuation.

V R Jayaraman, director and CEO, Virgo Engineers, said that the company targets to be among the top ten valve producers in the world.

"We have achieved 30-35 per cent yearly growth in the last two years or so and would grow to Rs 500 crore in three years, but the market is growing faster and we need to ramp up our presence by acquisitions and new lines of businesses," he added.

The Rs 172 crore group makes flow control valves for the oil and gas sector and is the largest domestic manufacturer of such valves. About 65 per cent of the company's business comes from oil and gas sector and remaining from chemicals, petrochemicals, dye-chem and pesticides sectors. The company supplies valves to end users in the oil and gas segment and also to project contractors who work for the end users.

"Acquisitions will give us presence in the entire range of valves required by the market," Jayaraman said.

In India, the company makes valves up to 24 inches and has a manufacturing unit in Italy that makes valves with lengths up to 60 inches. Its customers are spread across 68 countries.About 75 per cent of the group's revenues come from the exports.

In addition to the acqusition of manufacturing set ups in Europe, the company also has plans to set up a new plant in Hinjawadi near Pune and expand the capacity of its existing plant also in Hinjawadi, said Jayaraman .

About Rs 28 crore will be required for the domestic expansion and acquisitions will also be financed from the company's internal funds generation, said V B S Mani, founder director, Virgo Engineers. The new lines of business could be high pressure and cryogenic valves, he added.

Tano Capital's representative Amit Dand said the fund, set up by former Franklin Templeton joint CEO Charles Johnson, aims to invest in the businesses that have a strong promoter commitment, opportunity to go global and high profit potential.

The fund has so far invested $20 million in the domestic companies in sectors such as power cables, consumer services and pharmaceuticals, he added.

Tano Capital plans to raise $120 million in the fund by March 2007, he said, adding that the commitments so far were in the range of $64 million.