Any company that makes activated carbon from coal, wood or nut kernels, could be an ideal acquisition target, Rahman said. The acquisition will help Active Char expand its product portfolio and reduce its dependency its only raw material, coconut shells.
A strategic investor with the know how to tap end users with filteration and purification products in multiple geographies would be preferred over a private equity investor looking to infuse funds, Rahman said.
Activ Char, part of the Kerala's Mfaar group of companies, is wholly-owned by Rahman's family. His uncle Dr P Mohammed Ali holds a majority stake in the company.
The company exported a majority of its 2011-12 output and is eyeing a larger global footprint.
Activated carbon removes impurities from any medium. Activ Char uses coconut shells to manufacture activated carbon and sells this to manufacturers of air and water purifiers; to firms that use it to purify gold or edible oil for instance.
Market research firm Freedonia expects the global demand for activated carbon to rise ten percent every year till 2016 to 1.9 million metric tons. India exported around 30,000 metric tons of activated carbon, made from coconut shells, in the 2011-12 fiscal, according to data available with the Coconut Development Board.
Active Char also plans to invest INR7 crore over the next two years to manufacture “value added activated carbon products”, sold to original equipment makers, Rahman said. At present, they sell activated carbon to stage-one suppliers, he said.
The company exported around 80 percent of the 4,400 metric tons of activated carbon it produced in the 2011-12 fiscal, to buyers in Asia, the MENA region and in the US. It recorded an INR39 crore turnover during the 2011-12 financial year and expects to touch INR50 crore this year, Rahman says. New entrants in the local water and air purification industry, alongside sales to India’s defence sector will fuel growth, he said.