Takeovers,mergers abroad preferred growth route for Gujarat SMEs

The small and Medium Enterprises are growing big in Gujarat,not only in terms of size,but geographically as well.

The small and Medium Enterprises (SMEs) are growing big in Gujarat,not only in terms of size,but geographically as well. Companies based in Ahmedabad and Vadodara are now taking the route of inorganic growth (takeovers and mergers). Several SMEs in Gujarat are either in the process of acquiring companies in India or abroad,while some have already taken the plunge. In the last two years,many SMEs become larger companies through this route.

Vadodara-based Banco Ltd acquired a Dutch company through the process of auction from the liquidator of the company. The Ahmedabad-based Kiri Dyes and Chemicals Ltd recently acquired German firm Dystar for Rs 13 billion,while Ahmedabad-based Intas bio-pharma acquired Biological Process Development Inc. Likewise,Sadbhav Engineering took over Hong Kong mining company Ocean Bright Corporation Ltd (OBCL). These are just few of the companies who have chosen the inorganic route to growth.

Most of them are in the manufacturing sector,but the service sector companies are not lagging behind either. They too are in the process of acquiring new companies.

The Ahmedabad-based Elitcore Technologies a security solutions enterprise is planning for an acquisition in Europe. We have set aside around Rs 135 crore for acquisition of an IT company in Europe, said Hemal Patel,CEO Elitcore.

There are around 3 lakh SMEs in Gujarat and many of them will look forward for growth in the next few years.

Sanjeev Shah of Shah Sanjeev & Associates,a Chartered Accountants firm,said:

Earlier SMEs were not in a position to think about acquiring companies abroad. But now,because of the leverage buyout financing option and the acquisition funding being supported by private equity houses,they can easily do that. By having 15 to 20 per cent funds in hand,the company can buy a majority stake in any company abroad.

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Deals
* Vadodara-based Accord Communication Pvt Ltd acquires 100 per cent stake in Quality Electric Company for an undisclosed sum.

* Vadodara-based Banco Ltd acquires Dutch company.

* Ahmedabad-based Intas bio-pharma acquires Biological Process Development Inc.

* Sadbhav Engineering acquires Hong Kong company Ocean Bright Corporation Ltd

* Kiri Dyes and Chemicals Ltd acquires German company Dystar for Rs 13 billion

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