Financial Daily from THE HINDU group of publications
Thursday, Jul 15, 2004
Revathi Equipment eyeing new acquisitions, tie-ups
Coimbatore , July 14
EFFICIENT capital allocation seems to be the Coimbatore-based Revathi Equipment Ltd's business slogan this year as the company's balance sheet may this September show Rs 15 crore in new income, thanks to the compensation for the breached `non-solicitation' agreement the company is set to receive from its erstwhile owners, Atlas Copco.
The plain engineering company that produces predominantly open-cast mining equipment such as blast-hole drilling rigs may also go for widening its product basket and get into underground mining equipment manufacture and infrastructure/construction equipment manufacture later this year. To achieve this, the company may go in for a tie-up with some other company. The new partners/acquisitions it is aiming for are still under wraps, the company officials claim.
"We are looking into some acquisitions and are in the process of evaluating three opportunities. Two of them appear serious to us. If they fructify, Revathi Equipment will be with new acquisition by March-end," said Mr Abhishek Dalmia, Chairman, who would however, not identify the kind of acquisitions he is planning.
Mr Dalmia also appeared unperturbed about the impending competition in the local turf by Atlas Copco India, which is close to taking over Ingersoll Rand, the US engineering company, which is a leading player in the mining equipment manufacture and marketing in India.
"The competition from Ingersoll Rand had always been there as both Revathi and Ingersoll were already competing in the market and there was nothing new about it. But what has happened is that one MNC has been taken over by another MNC and both had been serious players in the market," said Mr Dalmia.
But what looks more imminent than the Coimbatore engineering company diversifying into wider mining range equipment including smaller drilling and building equipment is that Revathi could also emerge as a vehicle of new investments - be in financial or other product making - for its new promoters, Utkal Investments of the Delhi-based Renaissance group.
"We'll not be weighed down by which sector of business we should pursue but what we will be keen about is on the efficient capital deployment and it could happen either through Revathi Equipment or some company promoted by Revathi," Mr Dalmia told Business Line. Mr Dalmia was here to attend to the Revathi Equipment's annual general meeting last weekend.
Revathi Equipment had only recently entered into an out-of-court settlement with Atlas Copco for breach of the `non-competition/non-solicitation' agreement it had with Atlas Copco when the latter sold its stake to Mr Dalmia's Utkal Investments two years ago.
As per the agreement, Atlas Copco was not to compete in Indian market for the Revathi's product range in mining equipment for a five-year period. But within the two years now, Atlas Copco had through its takeover of Ingersoll Rand decided to compete in Indian market thereby severing the non-competition agreement with Revathi.
Earlier, Revathi had offered Atlas Copco a sum of Rs 10 crore as compensation for the non-competition. In the settlement, Atlas Copco had offered Rs 15 crore to Revathi Equipment as compensation for severance of the `non-competition' agreement, Rs 5 crore over and above the consideration it received originally from the Coimbatore company.
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