Thermax acquires Danish co for Rs 187 cr

The Economic Times | November 10, 2010

PUNE: In its drive to go global, Thermax has acquired European boiler maker Danstoker group for e29.5 million (around Rs187 crore). The Danish company has two manufacturing plants — one in Denmark and the other in Germany.

“This acquisition is part of Thermax's plans to become a global company. We will retain the Danstoker and Omnical brands, both of which we acquired on Monday, since these have an appeal in Russian and Middle East markets. The acquisition will also help Thermax for its water treatment and pollution control products through the brand association,” said Thermax's managing director, MS Unnikrishnan.

He added that they could expand capacities at the two European locations since both plants have the land to expand.

The Danstoker group, which comprises the Danstoker company based in Herning, Denmark, and its German subsidiary, Omnical Kessel , makes biomass and oil, and gas-based boilers as well as waste heat recovery products in the same range as Thermax makes standard packaged boilers, although Danstoker's focus on renewable energy sources will provide Thermax with new technologies.

Renewable and green products account for over half of the European company's current revenues of e40 million (October 2009-September 2010), while its non-renewable-energy-based boilers are carbon neutral.

Mr Unnikrishnan said the acquisition presented an opportunity for Thermax to source the latest technology, quality and production practices.

“We will now have a much wider supply chain available to us. We began our international purchase office in 2003, buying from China. Now we will expand this globally,” he said.

He was referring to the Rs3,300-crore energy and environment solutions provider's manufacturing bases in India and China. These, he said, will be integrated, although currently the Danstoker group sources solely from the very expensive European market.

The standard packaged boiler market, used for heating and cooling, is globally worth $4.5-5 billion, with residential being the biggest segment. Till now, Thermax addressed only the industrial heating market.

With this acquisition, it enters the industrial segment, with no intentions at the moment to enter the residential segment.

While the cash-rich Thermax could have gone in for an all-cash buyout, it has chosen to raise debt of euro 10 million, thus putting the onus on the newly-acquired company to perform.

Danstoker was set up in 1935 by the United Coal Importers. Prior to Thermax's acquisition, it was part-owned by some workers and a few investment funds. “The group lacked management bandwidth to grow outside the mature European market,” said Mr Unnikrishnan.

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