McNally Bharat buys Sayaji Iron

Kolkata: McNally Bharat Engineering Company Ltd (MBE) has acquired a 68.28 per cent stake in Sayaji Iron and Engineering Company Ltd for Rs 59.01 crore at Rs 221.60 a share.

The company will come out with an open offer on May 20, 2008, Mr Deepak Khaitan, Chairman of the company, said here on Friday.

Sayaji, with its plant located in Vadodara and Gujarat, is engaged in manufacturing a wide range of equipment used in crushing, grinding, screening, road making, construction and material-handling equipment, customised equipment for steel, cement, power and coal plants.

With this acquisition, McNally Bharat will be able to expand its crushing business, Mr Khaitan said while addressing a press conference to announce the acquisition.

The product range and skills of Sayaji would provide great synergy to MBE and would add sizeable value to its equipment business in terms of volume, range and depth. Sayaji is expected to have achieved a topline of about Rs 62-63 crore during the financial year 2007-08, Mr Khaitan said.

McNally Bharat is targeting a compounded annual growth (CAGR) of 35-40 per cent in the next three years. “To achieve a CAGR of 35-40 per cent we need to grow both organically and inorganically,” Mr Khaitan said.

The company would look at overseas acquisitions in the technology sector to meet the organic growth plan.

“We are looking at the US and Germany for possible acquisitions or even a joint venture,” he said. Refusing to divulge further details, Mr Khaitan said that the company was in talks with some companies, but nothing concrete had come through as yet.

“In case of an overseas acquisition one has to conduct greater due diligence and have better knowledge about their labour laws in order to function efficiently,” he added.

McNally Bharat plans to increase its existing manufacturing capacity in the equipment business and also acquire new capacity in related areas in order to expand their equipment business.