Atul Auto scouts for acquisition as part of expansion

Company doubling capacity at Rajkot to 48,000 units per annum

Rajkot based three-wheeler manufacturer Atul Auto Limited is planning to take the inorganic route to growth as it is scouting for an acquisition target as a part of its expansion plans. The company had earlier planned to start a new unit somewhere in Maharashtra or in the southern states.

Further, Atul will also invest around Rs 30 crore to more than double its Rajkot facility to 48,000 units per annum. Vijay Kedia, director, Atul Auto Ltd said, "Atul had invested Rs 30 crore in Rajkot unit last year for technological upgradation and also for the developing the Atul Gem model, and we will invest another Rs 30 crore this year to expand our present capacity. We are also looking forward to acquire a company in other part of India under our expansion plan."

He added that it is easier to build on an existing infrastructure rather than start from scratch. While Kedia did not divulge details on the potential size of the acquisition, he however, said that the company was already in talks with some merchant bankers to raise funds for the acquisition. Sources close to the development said that the Atul could acquire a small automobile unit near Pune.

Meanwhile, Atul Auto has posted a 20 times rise in net profit for the first quarter of the fiscal to Rs 2.1 crore on the back of its newly launches product the Atul Gem. Sales during the period also increased two-folds to 3,844 units from 1,867 units in the comparable period last financial year.

Kedia said, "We see great market potential for our vehicles both in the SME sector as well as large industries. Taking into consideration the growing demands, especially in the semi-urban and rural markets, we are planning to ramp up our production capacity and have also launched Atul Smart – a front engine vehicle in commercial segment."

Atul produces 3 –wheelers under the brand names, Shakti & Gem. Over 200,000 Shakti vehicles ply on Indian roads.