The Hindu Business Line : Praj Industries on the prowl

Acquisition plans
Praj is looking to acquire a small or medium scale engineering companies to meet its requirements in the US, Canada and the EU.
The company is preparing a blueprint for acquisition programme and the details would be ready by next month.

Kolkata , May 19

The Pune-based Praj Industries Ltd, a global leader in setting up alcohol and ethanol plants, is looking overseas to further broadbase its operations.

For this purpose, the company will be utilising a part of Rs 117 crore which it had raised through preferential allotment of shares and warrants to Japanese conglomerate Marubeni Corporation and Mr Vinod Khosla, the IT entrepreneur and Silicon Valley venture capitalist .

Praj is looking to acquire a small or medium scale engineering companies, which can be subsequently transformed to meet its requirements in the US, Canada and the European Union.

According to Mr Pramod Chaudhuri, Chairman, the company is currently preparing a blueprint of the proposed acquisition programme and the details would be ready by next month.

"Everything is being readied now. We would like to present this plan to the directors in our next board meeting. Prior to that I would not be able to say much about it," Mr Chaudhuri told Business Line.

He ruled out the appointment of a merchant banker for the acquisition exercise but added that Praj could utilise the services of a global consultant.

At present, its earnings are almost equally divided between domestic business and overseas jobs. It is active in South-East Asia, Africa, Latin America and Australia.

Job order in UK

In Europe, Praj just got its first job order in the UK. It does not have a presence in the US, Canada, China and Brazil, the world largest ethanol producer.

"We will have to create a big base in these new areas and we would have to do it at a fast pace. For that we will have to take over a ready-made set up. It may not be essentially into the ethanol business. We are looking at engineering companies only," he said.

Regarding the domestic market, Mr Chaudhuri is bullish and said that ethanol production was likely to go up by one billion litre per annum soon. He citied several reasons behind this expected growth.

However, in 2005-06 Praj would not register any substantial growth in its financial results, which would be finalised shortly. According to him, it was a year of "attaining stability" after recording stupendous growth in the earlier years.

"In the next two years, we are again bullish and hope to register quantum growth in our financial results," he said.

Part of the money raised through the preferential allotment would be utilised for R&D activities.

The company issued 24.33 lakh equity shares and 73 lakh warrants. Face value of both the shares and warrants are Rs 2 and was priced at Rs 120.25. Promoters have also invested through this instrument.

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