Confirming the developments, sources within the company said a suitable company had been identified and the valuation could be up to $100 million.
The agreement would be in the form of either an acquisition or a joint venture, and the exact value of the deal would be determined only after the agreement was drawn up. GGL has also set up offices recently in Sao Paulo in Brazil and New York to service markets in these regions more effectively.
A company official said the deal was expected to be finalised in the next 3-6 months. It could have been closed sooner, but for the Iraq war.
Overseas markets have been identified as a priority area for the company over the last few years. This deal will give us a manufacturing base in the USA and also provide us with a distribution network. We would then be able to step up our exports from India. With freight rates falling, it is increasingly feasible to export low value, high volume goods like glass packaging from here, he added.
He also said that while our costs are very low, our quality is as good as if not better than that of manufacturers around the world. This acquisition will reduce the distance between us and the customer, give confidence to the latter that we are in the market for good, allow us to provide logistics support at short notice and enable us to be in constant touch with our customers.
The official said the company would be funding the acquisition through both internal accruals of the group as well as institutional funds. GGL closed the financial year 2002-03 with a net turnover of Rs 233.93 crore and a profit after tax (PAT) of Rs 5.47 crore. Its cash reserves and surplus tot up Rs 152.26 crore. The parent company NPL closed the year with net sales of Rs 1014.78 crore and a PAT of Rs 118.12 crore.
Gujarat Glass was acquired by Piramal Enterprises in 1984, merged into NPL in 1990-91 and spun off as an independent subsidiary of NPL in 1998. While 54 per cent of the shareholding of GGL is with NPL, the balance 46 per cent is held by a consortium of international investors.
In 1999, GGL had acquired a 51 per cent stake in Colombo-based Ceylon Glass for a consideration of Rs 19.5 crore. The Rs 45-crore Ceylon Glass makes glass packaging for pharmaceuticals, food, beverages and perfumes. GGL has three manufacturing facilities located in Kosamba near Surat, Jambusar near Baroda and at Ratmalana in Sri Lanka.