Praj Industries Ltd., a maker of breweries backed by Indian billionaire Rakesh Jhunjhunwala, plans to buy a water treatment company as growing shortages lead to greater demand for the life-sustaining fluid.
“We are scouting for good buys,” Chairman Pramod Chaudhari said in an e-mail response without giving financial details as the company is still in the “scouting phase.”
Praj is expanding as global spending on water treatment rises as the world’s supply of fresh water shrinks, drawn down by farmers, cities and water-intensive industries. By 2030 India will face a 50 percent shortfall in water supply, according to a report published in 2009 by a group of organizations including the World Bank and Coca-Cola Co.
“An acquisition makes sense as the water treatment industry is worth $2 billion and growing between 25 and 30 percent,” said Shailesh Kumar, an analyst with K.R. Choksey Shares & Securities Pvt. “They have the necessary technology for water treatment” and Praj has been consciously trying to diversify away from its main business of making equipment for alcohol and ethanol plants, he said.
Praj’s shares, which have declined 31 percent this year, gained 1.3 percent to 73.05 rupees at 10:11 a.m. in Mumbai. The benchmark Sensex has gained 13 percent in the period.
Pune-based Praj has orders valued at 6 billion rupees ($131 million) to be completed over the next one year, Chaudhari said.
India’s cabinet in August ordered oil refiners to buy locally manufactured ethanol at 27 rupees a liter, handing producers a 26 percent increase over the previous government-set price. India is likely to produce 2.59 billion liters of ethanol in the year to March 31 of which 1 billion liters will be made available for blending with gasoline.
Jhunjhunwala, named by Forbes magazine as the Warren Buffett of India, owns about 6.3 percent of Praj Industries, according to data compiled by Bloomberg.