taken the inorganic expansion path across different business areas, be
it paper, engineering or food processing. How has the journey been?
Acquisitions are sexy to talk about, difficult to see through and even
more challenging to implement and integrate. Over the past couple of years,
we have seen about six deals and are close to finalising another one at
our food processing subsidiary, Global Green. One big learning is that
it’s important to walk out of deals and I’m glad we did that
in a few cases last year, when the valuations were sky-high.
Thapars have always been identified with the paper business and
with Bilt. Now the flagship group company is Crompton Greaves. Did you
envision that when you started?
Frankly, yes. It’s simple; you look at large engineering companies
globally and they have revenues of $100 billion-plus. In contrast, the
biggest paper firms in the US or Europe have revenues of at best $50-60
billion. Over time, Crompton Greaves has struck a number of deals to acquire
technologies, and even though the size of the deals was not very big,
they still generated substantial revenues. The success of Crompton Greaves
has now fired up the management of Bilt and there is a healthy competition
within the group. In fact, our biggest overseas acquisition till date
in terms of value has been that of Malaysian pulp and paper firm, Sabah
Forest. Bilt has also been performing well and is in the process of capacity
expansion, which should add revenues.
While the paper and engineering segments have grown, your chemicals
business has not been too fired up...
Through Solaris ChemTech, we are involved in bromine-related business.
While it’s true that the chemicals business has not taken off, we
have had a few breakthroughs. One area which can become important for
Solaris is specialty chemicals, which can see the company entering the
pharma sector as an ingredient supplier or even as a drug manufacturer.
But we do not plan to become a full-scale pharma company with R&D
like Ranbaxy Labs, for instance, as it is a different ball-game.
To move from $3 billion to $10 billion, you will need to take
big steps. Are you looking at any billion-dollar deals?
In Crompton Greaves, we are at a level where one option is to go for big
multi-billion dollar giants, which we are not looking at right now, and
they are not up for sale anyway. We will continue to acquire smaller firms,
which bring us technology and add $100-200 million to our revenues. We
would also like to scale up in organically. For instance, I feel the consumer
products unit at Crompton Greaves can generate $1 billion in revenues,
so there’s immense scope in expanding within the field we are in
In case of Bilt, the next step will have to be big. Sabah Forest was a
gem. It is unlikely we’ll find another similar target, so we will
have to look at a bigger deal which can be in Asia, Africa or Latin America.
We are also ramping up capacities in Malaysia, which will require a lot
of capital and will give us a good size. In the food processing space,
we are already one of the world’s largest players. If the power
business fires up, it can contribute significantly to our vision of reaching
$10 billion in revenue in five years. Our presence in IT and BPO is small,
but these segments have got traction and we can scale up.