Ion Exchange Services scouts for buy-outs

Bangalore-based Ion Exchange Services Limited (IESL), a player providing services of water and waste water treatment plants in India, is scouting for acquisition targets.

IESL is an associate company of the listed company Ion Exchange which is one of the biggest players in the country in water purification technology. IESL, which saw revenues of Rs 73 crore last year and growing at a CAGR of 18 per cent, believes it can grow faster if it is able to acquire a few niche players who are constrained by their scale and geographical reach and in a sector dominated by small and unorganised players.

“The targets are in the range of Rs 2 crore, and Rs 5 crore with about 50 customers,” said Dinesh Sadasivan, CEO of IESL. The acquisitions will give the service provider a foothold in many geographies where it doesn’t have a presence or will get access to niche service providers. IESL on Sunday provides its services across diversified sectors like pharmaceuticals, breweries, food & beverages, hotels, hospitals, software technology parks, to name a few.

The water treatment market has been estimated by Frost & Sullivan to be around, Rs 6,000 crore. Of this, the services market is about Rs 500 crore on Sunday.

To meet its target, the company has two plans. It aims to offer customised services to multi-location customers. For instance, it’s in talks with the Taj group which has 60 properties. So, if it signs one rate contract, it will get economies of scale. It is also associating and re-grouping with Ion Exchange to cater to the heavy segment. “We may have only one division. So, we may become one with Ion Exchange,” said Sadasivan.

But, for the acquisitions it may not be looking to raise any funds right now. “As of now the company has no plans for any more borrowings. We have a working capital facility with the bank and KSFC financed our new building project. This apart we do not need any more borrowings,” said Sadasivan.

Some of the major clients include Infosys, Sobha Developers, Trident Oberoi and Taj.

Infosys is under operation & maintenance contract (O&M). It is a service contract where IESL undertakes complete responsibility of the supply of treated water in required quantities and of desired quality at any client’s place. Some of the clients under this contract (other than Infosys) are Sobha Developers,RMZ,Tata Motors, Trident Oberoi and Taj.

The company has cash reserves and surplus of around Rs 5 crore.