The entrepreneur got that one thing right that had made his first acquisition successful – he knew his prey inside out. Since 1999, as he nurtured his company, Dutta had kept an eye on what was happening at rival India Foils. By 2004, Dutta had set up his first foil rolling mill in Daman and had crossed Rs. 100 crore in revenues. He had created a niche for himself among pharmaceuticals companies like Pfizer, GlaxoSmithline and Novartis. His rise was acknowledged by the competition. Indal, then a unit of Hindalco Industries, stopped supplying him with the basic raw material as the A.V. Birla company itself was in the packaging business. Dutta quickly started sourcing the material from an overseas company.
...With more than 20 other former India Foils senior managers with him, Dutta exactly knew the problems. And he had also found the solution by the time India Foils came under the BIFR (Board for Industrial and Financial Reconstruction) fold in 2005. To make things easier, Dutta made sure that Ess Dee didn’t get the burden of the Rs. 230 crore debt that was on India Foils’ books. Instead, Vedanta Resources agreed to “assume” the debt. “On hindsight, the asking price of Rs. 130 crore came cheap for Ess Dee Aluminium,” says Vijay Dave, analyst at Mumbai-based Sunidi Securities & Finance. Not only that, Ess Dee’s integrated business model suited India Foils, he adds.
...The self-made millionaire is unconcerned about the financial burden, comforted by Ess Dee’s market capitalisation of about Rs. 950 crore. India Foils has a market capitalisation of nearly Rs. 250 crore. And it is not surprising that Dutta is flooded with offers from financial institutions who want to participate in the Rs. 500 crore fund raising exercise. It is a far change from those early days when he had to face “bad language and attitude” from bankers when he had gone for his first loan, of Rs. 40,000, in the early 1990s. “The bee will only come where the honey is. Then I didn’t have honey, now I have,” says Dutta.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at email@example.com