Garware Technical Fibres Exploring $20-Million Acquisition In Europe, Says CMD

Garware Technical Fibres Ltd. is actively on the lookout for an overseas acquisition worth about $20 million, said Chairman and Managing Director Vayu Garware.

The top executive, speaking to NDTV Profit, said that since it will be the company's first ever acquisition, the size may not be big.

“We will continue to look at the opportunities of M&As (mergers and acquisitions). Size will not initially be very large. We're looking at the $20-million range. It's very easy for us to digest,” he said.

However, there are a few prerequisites that the company looks for before acquiring a business. “It should be a business we understand well, products we understand well, and things that we can add value (to). That's a very core part of our strategy for acquisition,” Garware said.

He said that the company’s focus for this (acquisition) will remain outside India, “probably Europe”.

“A large part of our business is in Europe. Many of our customers also want us to be closer to them. For example, there have been so many challenges in the global supply chain. That's been one of the key drivers. So, yes, Europe is probably our primary target right now,” Garware explained.

The CMD asserted that there will be no impact on the return on capital employed due to a future acquisition. “If there is an acquisition that is significant, then we'll have to see at that time. But, in the normal capex, no,” he said.

Going forward, the company is “looking at aggressively growing”, and it is increasing its capital expenditure to meet this goal. “We have good opportunities, including in value-added growth space, in some of these areas where we're increasing the capex,” Garware revealed.

The top executive further noted that the focus of his company was “always on profit growth”. Elaborating, he said, “So 20% profit growth is something that is very much on our plan. And we hope that we will be close to that.”

Garware Technical Fibres’ profit after tax rose by 26% to Rs 66 crore in the second quarter of current financial year as against Rs 52.5 crore in the corresponding period of FY24.

“This quarter, particularly, we've really been driven by the global aquaculture business as well as our geosynthetic business. The infrastructure investment in India driven hard by the government has been a very positive area for us, including soil reinforcement structures and things like that. So we are quite bullish on that area,” Garware noted.

Shares of Garware Technical Fibres closed 0.44% higher at Rs 4,610 on the NSE on Friday. In comparison, benchmark index Nifty 50 gained 2.39% to end at 23,907.25.