Chennai-based water and waste water management company VA Tech Wabag Ltd is looking for acquisitions in overseas in the range of around ¤200 million to increase its growth momentum.
The company has shortlisted some target companies for acquisition and is expected to enter into due deligence soon, said S Varadarajan, chief financial officer, VA Tech Wabag Ltd. “It would be a medium-size acquisition. We have a vision to become a Rs 6,000 crore company in next five to six years and almost 20-25 per cent of the growth is expected to come from inorganic segment,” he said.
The acquisition would be targeted in the fast-growing markets like China, West Asia and North Africa. The plans are either to improve penetration in these markets or to bring in new technology.
The company has identified sea water desalination and water reuse as major technologies for expansion in future and the acquisition could be in line with this to strengthen its activities in this segment.
It has a cash balance of around Rs 350 crore and it could leverage other means to fund the acquisition, he added. At present, the company has presence in North Africa, West Asia, Central and Eastern Europe, South East Asia, China, apart from India.
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 around 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 are not reached LoI stage. However, the company would not be aggressive in investing in BOOT projects while increasing its partnership in such projects, said Varadarajan. The company 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 of around Rs 2,400 crore in order book in India. It is expecting a growth of 20 per cent in backlog of order book in India by the end of current fiscal.