GMM Pfaudler’s acquisition of HDO Tech is a timely opportunity, said Tarak Patel, Managing Director at the company on Wednesday. GMM Pfaudler acquired the assets of the heavy engineering company for nearly Rs 60 crore.

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By the end of FY22, the company would have to build a new factory, look at expanding the current businesses, he said.

“So this acquisition was a very timely opportunity. This is a state-of-the-art facility, it has seven manufacturing base and something that we can move our heavy engineering business within the next six-nine months. So this acquisition allows us to grow our heavy engineering business and at the same time allows us to expand our glass-lined business at our original facility.”

The factory was operational until three years ago.

“We would have to refurbish some of the equipment but it has a lot of capabilities that we currently don’t have. In our view, this factory can generate close to about Rs 500 crore of revenue over the next three-five years compared to what we are currently doing in heavy engineering at about Rs 100 crore,” Patel added.

From an Indian standpoint right now, the next five years have been taken care of in terms of capacity with this acquisition.

“If we do look at acquisitions, it is more likely that we would look at something internationally, something that enhances our product portfolio,” he said.

Patel believes around Rs 10-15 crore would be required to get the equipment up to mark and office space ready for occupation.

On demand, Patel said, “Things are looking good. Both chemical and pharmaceutical are doing quite well. We have seen a lot of investment coming in both these sectors. We are seeing a lot of government spending as well in the heavy engineering space. A lot of projects in oil and gas and petrochemicals—all the industrial segments that we cater to are looking strong. Demand is pretty strong, so the margin is something that we will hopefully maintain going forward.”

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(Edited by : Ajay Vaishnav)

First Published:Mar 17, 2021 11:05 AM IST