Less than four years after acquiring water and sewage treatment services firm Gondwana Engineers Ltd, engineering firm Kirloskar Brothers has sold the company to Doshion Veolia Water Solutions Pvt Ltd, a joint venture between Ahmedabad-based Doshion Ltd and one of the world’s largest water and water waste management firm Veolia.

In the process it has made a cool profit of Rs 39.8 crore, having sold the firm at Rs 47.44 crore ($10.5 million) against the purchase cost of Rs 7.63 crore ($1.7 million).

Kirloskar Brothers had acquired Gondwana Engineers in September, 2007, and was expected to expand its activities in the related field, besides achieving business synergies.

Nagpur-based Gondwana Engineers is a three-decade-old firm, started by technocrat S D Shangarpawar. It specialises in various water, sewage and effluent treatment plants, and is also engaged in operation and maintenance of various treatment plants.

For the year ended March, 2010, it had a total income of Rs 69.6 crore which grew 11.2 per cent over the year-ago period. Its PBT rose 26.2 per cent to Rs 4.5 crore and net profit increased 26.8 per cent to Rs 2.98 crore in the same period. This means the deal was struck at 15.7 times its one-year old earnings.

ICICI Ventures-backed VA Tech Wabag, which has a market cap of Rs 1,320 crore ($293 million), had net sales of Rs 727 crore and net profit of Rs 6.6 crore ($1.5 million) for the nine-month period ended December, 2010, on a consolidated level. 

Early this year, another Kirloskar group firm, Nalanda Capital-backed Kirloskar Oil Engines, had sold its bearings business division to Pierburg India Pvt Ltd, the auto component making arm of German engineering group Rheinmetall, for Rs 87 crore.

For Doshion Veolia Water Solutions, the deal will strengthen its presence in the business. The joint venture company now aims to execute small, medium and large-size EPC projects for water and waste water management facilities in municipal, infrastructural and industrial space.

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