Kirloskar Brothers, India's leading pump manufacturer, is looking at setting up a special purpose vehicle overseas to expand its business through acquisitions.
The new company would be a 100 per cent subsidiary of Kirloskar Brothers, with an investment portfolio of Rs 20 crore (Rs 200 million) in the initial stages.
"About 5 to 6 European companies in the pump manufacturing sector had approached us to manage their operations some time back. Therefore, we felt that a separate company should be set up to handle such kind of operations," said Sanjay Kirloskar, chairman & managing director, Kirloskar Brothers.
"We are looking at financing the company through internal accruals as well as other options," Kirloskar said.
The new company is expected to enhance the existing operations of the company. "We export quite a bit to the European and the US markets, therefore it makes sense for us to have centres in these markets," said Kirloskar.
Kirloskar Brothers exported almost 30 per cent of its total production in 2002-03, which amounted to an export turnover of Rs 58.5 crore (Rs 585 million).
"We will not only look at marketing our products through these companies, but also utilise and integrate their manufacturing facilities," added Kirloskar.
"We have conducted due diligence on some companies already, and will be talking to them regarding the proceedings soon," said Kirloskar.
The companies that have been short listed for acquisitions are mainly privately owned.
However, he declined to disclose the location of the subsidiary. "We've been considering this proposal for some time now, but haven't taken a final decision yet. It could take between 6 months to a year before something concrete can be said," said Kirloskar.
Considering that the potential acquisitions were in the European markets, the subsidiary could be set up there around, he added.