The deal size could be around Rs 100-150 crore and the potential acquisition could bring in incremental revenues of Rs 200-300 crore and many international markets access. The acquisition is likely to be funded from the internal accruals and debt, if need arises, added people.
Backed by Everstone capital, SJS is set to come out with an IPO shortly, as it aims to gain geographical access to reach closer to prospective customers and eye doubling of revenues in the next three years, said people aware of development.
The Bengaluru headquartered company is in advanced discussion with two-three companies overseas to expand its offering in the In Mould Label (IML) and In Mould Decorative parts (IMD). IMD/IML is a process for decorating or labelling injection moulded plastic parts or components during the plastic injection moulding cycle.
An email sent to the company did not elicit any response. Despite repeated attempts, company officials were unavailable for the comments.
In the beginning of FY-22, SJS acquired Pune-based chrome plating company Exotech for Rs 64 crore to expand its product portfolio and increase manufacturing capability. With addition of products from Exotech, the company plans to cross sell products to existing customers across two-wheeler, passenger vehicle and consumer appliances.
A key supplier to Bajaj Auto, Mahindra, Royal Enfield, TVS, SJS closed FY-21 with revenues of Rs 320 crore in FY21 on a proforma basis. The two-wheeler business accounted for over half of its revenues, about 15% came from passenger vehicles and balance from consumer durable companies.
The idea of an overseas acquisition is to be closer to the customer and yet deliver best cost products made from India. The move may not only help build volumes, but is margin accretive too.
An acquisition in the Asean region may boost its two-wheeler business, whereas a buy in Europe or US could boost its car or consumer durable arm.
Exports accounted for nearly 16% of the total sales of the company in FY21, up from 9.8% in FY19.
The company has warehouses in the USA, Brazil, Italy, Vietnam and Russia.
SJS Enterprise is backed by private equity firm Everstone capital and filed a draft red herring prospectus (DHRP) with SEBI to raise about Rs 800 crore from the initial public offering.