In its maiden overseas venture, HNG had acquired assets of Agenda Glass AG in Germany from the insolvency administrator at a consideration of €50 million (approximately Rs 345 crore at the current exchange rate), earlier this fiscal.
“In the next 3-6 months there will be a lot of firewall sales (by lenders) in Europe. The average equity to risk-weighted ratio is 4.3 per cent compared to Basel-III requirement of 8 per cent. Overleveraged or non-performing companies will be ruthlessly sold off,” the Vice-Chairman and Managing Director of HNG, Mr Mukul Somany told Business Line.
Hit by a sovereign debt crisis, Europe is trying to ‘firewall´ (safeguard) its troubled banking industry from capital inadequacy by putting stricter lending norms. Keenly watching developments
Even though it is looking forward to acquiring more assets abroad, the company has ruled out West Asia and North Africa from its list of probable destinations following the political unrest in the region. While opportunities are being evaluated in Southeast Asia (including Thailand, Philippines, Malaysia and others), the company is keenly watching developments in Europe.
“Europe may offer us more opportunities than we had originally envisaged,” Mr Somany said. Though he did not clarify if the company had identified any asset in the continent, he hinted that the company was looking for assets identical to Agenda´s. “We are a conservative company and will (only) chew as much as we can digest,” Mr Somany added.
Indian operations benefit
The company´s acquisition agenda will revolve on three basic criteria — quality of asset, product portfolio and availability of local market.
While local market will help HNG run its overseas operations profitably, the company is particularly targeting acquisitions that offer it direct access to first world technology and best practices, thereby helping to make its Indian operations more cost competitive, efficient and offering a wider bouquet of products to consumers.
“In next 12-18 months, substantial benefits will accrue (to Indian operations) from this integration (between overseas and Indian operations),” Mr Somany said. “We expect to reduce costs (of Indian operations) by a couple of percentage points due to high yield, labour productivity and introducing specialised and niche products to Indian consumers,” he added.