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Hindustan Sanitaryware plans acquisitions in Europe

Post Time:Oct 14,2008Classify:Company NewsView:424

Hindustan Sanitaryware and Industries Ltd (HSIL), the flagship company of the Somany Group, is looking for an acquisition in the range of Rs 130 crore to Rs 300 crore in Europe, for which it is in talks with companies focusing on sanitaryware products and bathroom accessories such as high-end bathtubs and shower enclosures.

HSIL — a manufacturer of sanitaryware products in India — has already roped in bankers in Europe to identify potential targets for an acquisition.

Destination Europe

“Europe has some good brands and strong technology. We are in the process of short-listing companies.“ An acquisition would help us strengthen our presence in the higher-end of the market,” Sandip Somany, Joint Managing Director of HSIL told Business Line. Hindustan Sanitary plans Rs 210 cr expansion

Majority stake

HSIL is mostly talking to companies that are privately-held and family-run. “We are keen to acquire a majority stake."
“However, if the company is good and the promoters can add value, we are open to promoters retaining 20-40 per cent holding in the company."

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“But we plan to have at least 60 per cent stake,” he said. He added that the company had walked out of a few deals as it was not interested in a minority position. The size of the transaction is likely to be in the range of €20-50 million (Rs 130 crore to Rs 300 crore). “We plan to fund the acquisition through internal accruals, and we may also take debt by leveraging the balance sheet of the acquired company,” he said. HSIL’s topline for the year ended March 2008 stood at about Rs 576 crore.

New facility

HSIL has two divisions under it, the glass division (container glass) and building products division (bathroom products, home appliances and HSIL’s own sanitaryware brand). The manufacturing facility for the glass business is located at Hyderabad and produces about 950 million bottles a year. In a bid to increase its production capacity, the company is setting up a greenfield manufacturing plant at a site located about 70 km from Hyderabad at an investment of Rs 250 crore. The plant, which is likely to be commissioned by March 2009, would increase the overall capacity to 1.8 billion bottles a year.

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The building products division — with manufacturing facilities located in Bahadurgarh (Haryana) and Bibinagar (Andhra Pradesh) adding up to a capacity of 3.2 million pieces per annum — has been growing at about 20 per cent. “We intend to double the revenue from this business in three years, and an acquisition will give us a major fillip,” he added.

Source: Hindustan Sanitaryware & Industries Ltd.Author: shangyi

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