ET reported that engineering firm Hindustan Dorr Oliver, a listed subsidiary of Hyderabad based infrastructure firm IVRCL, is eyeing more acquisitions in Europe.
Mr E Sudhir Reddy group chairman said that HDO had acquired Davy Markham, a Sheffield based engineering firm for GBP 9.5 million in March 2010. Davy Markham is into design, manufacturing and fabrication of heavy and complex engineering components and assemblies in the mining, nuclear, power generation and steel sectors. The move comes at a time when analysts were expressing concerns over the fall in revenues and profits of HDO and the weak revenue visibility from the order backlog.
Mr Reddy told ET that "We want to expand our base in the UK and have aggressively started looking at 4 to 5 more acquisitions, each costing GBP 5 to GBP 10 million."
The target companies are in a radius of 50 kilometers from the Sheffield facility of Davy Markham. HDO has shortlisted proprietary engineering firms specialising in the manufacture of components for mining, defense and nuclear sectors in and around Sheffield. These acquisitions should support the growth of Davy Markham and expand its bouquet of offerings.
He said that the strategy is to get the manufacturing capabilities of the acquired engineering firms and set up their engineering design and manufacturing centers back in India. He added that "Majority of the works on behalf of Davy Markham and its associated firms subsequent to the acquisitions will be executed at the Indian facilities and the balance works and finishing touches will be handled at the UK facility. The idea is to be cost effective with the help of India design and manufacturing base."
He said that aimed at expanding the manufacturing infrastructure at Davy Markham, the company is in the process of acquiring 20 acre at the Sheffield facility for around GBP 17 million.
Mr Reddy added that Davy Markham is emerging as a GBP 50 million company, and the 4 to 5 acquisitions and their merger into Davy Markham should enable it evolve into a GBP 100 million to GBP 150 million entity over 2 to 3 years. He said that "The opportunities and product offerings from Davy Markham after the acquisitions will significantly increase and the growth of the UK firm will be faster. Davy Markham will be positioned as a uniquely focused engineering design company with manufacturing bases both in Sheffield and India."
Mr Reddy said that Davy Markham, which used to bid for projects in the UK and Canadian markets, has expanded to Peru, Chili, Mexico and the US under the new management. It has also started bidding for underground mining projects in India.
(Sourced from www.economictimes.com)
