Hari Machines Limited, a Dalmia group company engaged in making machinery and equipment for core sector industries, is close to raising Rs 200 crore in funding from private equity major India Value Fund Advisors, said sources close to the development to VCCircle.
The PE firm may pick up around 10% stake in the company which makes tools for steel, sponge iron, refractory and cement industries. The deal, for which the term sheet has already been signed, could value the company at nearly Rs 2,000 crore.
Orissa-based Hari Machines is part of the Dalmia Group, headed by MH Dalmia, whose flagship firm is OCL India Ltd. The group has interests in cement, industrial ceramics, chemicals, mechanical engineering, real estate, information technology, international trading and investment banking.
Mumbai-based investment bank Avendus Capital is advising Hari Machines on the fundraise. Emails sent to India Value Fund, Hari Machines and Avendus did not elicit a response. Calls made to offices of Hari Machines also did not get a response.
Hari Machines operates in six business segments - refractory, sponge iron, engineering, mineral beneficiation, cement & mining and boilers equipment. It started operations in 1971 manufacturing spares and equipment for the refractory industry but has since then diversified into various segments. Till 2006, its revenues were driven by sponge iron equipment segment, the firm now counts on mineral beneficiation segment for majority of its revenues. Mineral beneficiation is tipped to be the next growth area for the industry.
Hari Machines has also entered into technical collaboration and exclusive manufacturing contract with Germany's Allmineral Aufbereitungstechnik GmbH for mineral beneficiation. Hari Machines reported a 50% increase in operating income to Rs 195 crore in FY10 from Rs 130 crore in FY09. Its profit after tax more than tripled to Rs 16.13 crore from Rs 5.04, according to an ICRA report dated October.
Several old business houses of India have started partnering with private equity funds as they look at new avenues of capital to push growth. While several business houses like Mahindras and Shriram have raised PE funding for a number of their businesses, Mahindra Group has also partnered with PE firms like ICICI Venture and Kotak PE for its overseas acquisitions. It partnered with India Value Fund in 2007 to acquire Mahindra Hinoday, which is the largest independent ductile iron casting company.
Another old business house that has raised PE funding this year includes Thapar's Avantha Group companies - agricultural products firm Global Green Company Ltd (Rabo Equity Advisors) and Avantha Power (KKR). Murugappa Group's Cholamandalam DBS Finance also raised Rs 100 crore from IFC. Another Dalmia group firm raised funding when Kohlberg Kravis Roberts (KKR) put $170 million in publicly listed Dalmia (Bharat) Cement's subsidiary Avnija Properties. Dalmia (Bharat) has earlier raised funding from Actis.