Aug 1, 2010 - Abrasives and industrial ceramics maker Carborundum Universal will continue to pursue its inorganic growth strategy in overseas markets. It is eyeing firms with potential customer base in the US and European markets to compete with world giants.
With several buys in the recent past and subsequent organic expansions, there has been significant shift in revenue mix with share of international business gro w ing to about 44 per cent in 2009-10 from about 12 per cent in 2005-06. The same is expected to grow to about 60 per cent to 70 per cent over the next few years.
"We have a well-devised inorganic strategy. For ma n ufacturing, we will go to markets such as Russia and South America where we get low-cost raw materials. In markets like the US and Europe, we would look at companies with strong customer base. If we have to take on big players in the world, we need mid-sized companies", K Srinivasan, MD at Carborundum Universal told Financial Chronicle.
"We have a template for this and have a list of potential companies for acquisitions in each geography. But will make announcements as soon as we finalise something", he added.
On the valuations, Srinivasan said it was almost the lowest during the previous year when the industry was impacted by the economic downturn. Though the company could have made some acquisitions last year, the market was not showing any direction and hence the company did not want to pursue anything. However, the valuations have now doubled in key markets on the back of economic recovery, he added.
Carborundum made acquisitions and launched new ventures in Russia, China and South Africa among other countries in the recent past.
It invested over Rs 600 crore in capex and acquisitions between 2006-07 and 2009-10. It has now embarked on further expansion of capacities in Russia and South Africa besides India.
With several buys in the recent past and subsequent organic expansions, there has been significant shift in revenue mix with share of international business gro w ing to about 44 per cent in 2009-10 from about 12 per cent in 2005-06. The same is expected to grow to about 60 per cent to 70 per cent over the next few years.
"We have a well-devised inorganic strategy. For ma n ufacturing, we will go to markets such as Russia and South America where we get low-cost raw materials. In markets like the US and Europe, we would look at companies with strong customer base. If we have to take on big players in the world, we need mid-sized companies", K Srinivasan, MD at Carborundum Universal told Financial Chronicle.
"We have a template for this and have a list of potential companies for acquisitions in each geography. But will make announcements as soon as we finalise something", he added.
On the valuations, Srinivasan said it was almost the lowest during the previous year when the industry was impacted by the economic downturn. Though the company could have made some acquisitions last year, the market was not showing any direction and hence the company did not want to pursue anything. However, the valuations have now doubled in key markets on the back of economic recovery, he added.
Carborundum made acquisitions and launched new ventures in Russia, China and South Africa among other countries in the recent past.
It invested over Rs 600 crore in capex and acquisitions between 2006-07 and 2009-10. It has now embarked on further expansion of capacities in Russia and South Africa besides India.
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