C Chitti Pantulu

Hyderabad: IVRCL Infrastructure and Projects is close to acquiring a Swedish construction equipment manufacturer. The deal, valued upwards of $100 million, will speed up the $1 billion company’s backward integration drive.

The deal is currently going through legal due diligence and should be closed soon if everything goes right, group chairman and managing director E Sudhir Reddy told DNA Money.

The acquisition will play a key role in IVRCL’s goal to be a $2 billion company within the next five years. Apart from meeting its IVRCL’s requirement for construction equipment, it will also help the construction major to foray into neighbouring countries like Pakistan and Bangladesh and regions like the Middle East and southeast Asia, Reddy added.

He however did not name the target company except for saying that it was a well known and established brand in the construction equipment business.

Meanwhile, IVRCL is also scouting for smaller acquisitions in the $10-15 million range. These will add to its consulting and services portfolio in the oil and gas sector.

“There will be one or two such acquisitions immediately and perhaps two more later,” Reddy added.

These smaller acquisitions will also add to the KPO capabilities of IVRCL’s wholly owned engineering and turnkey solutions subsidiary Hindustan Dorr Oliver (HDO).

IVRCL had acquired an ailing HDO about three years back and turned it around. Subsequent to the acquisition, HDO has emerged as an engineering and turnkey solutions company and IVRCL is looking to leverage its capabilities in the oil and gas business too.

The subsidiary currently has a 150 strong KPO team while another 100 odd engineers should be added to it in the next two months through the acquisitions, the IVRCL chairman said. In two years time, it should a 800-1000-people-strong knowledge provider.

More recently, IVRCL bought privately held oil and gas exploration and production company Alkor Petroo Ltd, including rights in five exploration blocks in Yemen and Egypt.

IVRCL has hitched its wagon to India’s development story. According to the planning commission, the country will need an investment of $103 billion in the 11th Plan period.

IVRCL implements water supply and environment projects in India on an EPC (engineering, procurement and construction) basis and has a presence across the value chain, Credit Suisse research analysts Amit Shah and Vinod Chari observed in report.

They added that the company will be one of the major beneficiaries of the accelerating capex in the country going forward, given its expertise in executing such projects.

IVRCL has a current order book of Rs 14,000 crore which will be executed over the next 30 months. Significantly, 98% of its orders are government projects of which 55% are related to water projects.

“We should grow at a CAGR of 40-45% over the next three years to be a $2 billion entity within the next five years,” the company CMD said.

Source : DNA