Tata Steel arm eyes M&As to post 5-fold growth

KOLKATA: TRF, a Tata Steel arm specialising in material handling systems, is targeting the merger and aquisition (M&A) route in a bid to notch up a five-fold revenue growth by the calender year 2013. The company is actively looking at a couple of possible foreign acquisition targets and expects to finalise a deal in the current year 2009-10.

���We are looking at a few potential targets, both domestic and foreign ones, for acquisition. The plan is in line with our aggressive growth plans to reach a turnover of Rs 2,500 crore by 2013,��� TRF executive director RC Nandrajog told ET. Earlier in October 2007, TRF Singapore, a wholly-owned subsidiary of TRF, had acquired a 51% stake in Singapore-based York Transport Equipment, a material handling company at a cost of around Rs 50 crore. While he did not elaborate on potential acquisition targets or on the possible size of the acquisition, Mr Nandrajog indicated the impending deal ���could be of a size similar to the York acquisition���.

Cost of acquisition is a key issue since TRF would need to service the York acquisition and also maintain a 1:1 debt equity ratio, he added.

In terms of organic growth, TRF has recently entered into a three-way joint venture (JV) with Tata Capital and Jasper Industries to manufacture automotive components in Lucknow. TRF will have a 51% stake in the JV ��� Adithya Automotive Applications (P) ��� while the two other partners Jasper and Tata Capital will hold 29% and 20% stakes, respectively.

The move also coincides with a conscious shift in the company���s plan to increase the share of material handling business in its overall revenues. So far, TRF���s mainstay has been bulk material handling, which caters to steel, coal and mining sectors. ���We want to de-risk our business from cyclical fluctuations. Hence, we have decided to build up a presence in material handling business,��� added Mr Nandrajog.

TRF had recorded a 62% rise in standalone revenue to Rs 531.65 crore in 2008-09, which it expects to touch Rs 750-800 crore in 2009-10.

On a consolidated basis, the company is poised to cross revenues of Rs 1,000 crore this year with its subsidiary, York, contributing nearly Rs 200-250 crore.