Praj buys Neela stake, enters niche water treatment space

Praj Industries, a bio-ethanol and water treatment solutions provider, has acquired a 50.20% stake in Neela Systems, a Mumbai-based water treatment company operating in the pharmaceuticals space, for Rs64 crore.

The acquisition allows Praj to foray into international markets in the water treatment space and tap the niche areas of biotech, pharmaceutical, life sciences and cosmetics.

Pramod Chaudhari, chairman of Praj, said the company can now access technology needed to address the healthcare market in the emerging countries and corner a substantial share in the rapidly expanding pie.

Chaudhari said the specialty water treatment business in emerging markets was growing at a brisk pace. Since Praj is currently in its silent period, Chaudhari did not give details about how much the acquisition will add to the company’s topline and bottomline, but said there was an option to increase stake in Neela Systems.

“We will take a call in due course of time, but as of now our focus is to address the international market in the high purity water treatment process,” said Chaudhari.

Last year Neela Systems posted a turnover of `90 crore, according to the press release issued by the company.

Praj is a debt-free company with cash of close to Rs400 crore on its balance sheet and sales of Rs555 crore in the last fiscal.

According to experts, the current size of the water and water treatment market in India is $280-300 million, which includes both specialty and commodity chemicals.

Nalco Chemicals India, a subsidiary of the US-based Nalco Chemicals, is currently the market leader in the specialty chemicals with a market share of 20%, or about Rs120 crore.

Neela Systems has a plant in Thane, near Mumbai, to manufacture water treatment systems.