Ahmedabad-based venture capital firm GVFL Ltd, formerly Gujarat Venture Finance Ltd, has picked up 40% stake in FairTech Engineering Services Ltd, a Bangalore-based design and consulting service provider to the aerospace industry, for an undisclosed sum. This is the fifth investment of GVFL from its SME Technology Venture Fund, which was launched in 2008 with a target corpus of Rs 450 crore.
In three of its earlier investments, GVFL has infused Rs 11 crore each in companies such as Sahajanand Laser Technology Ltd, eInfochips and E-Cube India Solutions Ltd, Mihir Joshi, managing director, GVFL told VCCircle. However, he did not disclose the amount invested in Sebacic India Ltd and FairTech Engineering Services Ltd, the fourth and fifth investments respectively.
Joshi further added that GVFL is set to finalise its next deal in the next 10 days. The investment will go into a south India-based company in the education space.
Speaking about the rationale behind investment in FairTech, Joshi stated that India is becoming an attractive destination for aerospace industry and thus the investment makes sense.
FairTech plans to deploy the money in technology innovation and expand geographic presence in Europe and Germany, apart from strengthening its operations in India and UK.
The company has chalked out a growth plan in between Rs 5 crore and Rs 10 crore, and said that the funds raised from GVFL will meet the requirements. “We are more or less getting an investment within this range in this stake dilution,” said Subramani Srinivasan, MD and CEO, FairTech.
He stated that the aerospace industry is growing at a very rapid pace, and so to sustain in the market, innovation is a must. “The success to this industry lies in domain capability. We have realised that apart from quality assurance, technical capability, marketing and delivery systems, domain expertise has to be looked upon in our growth plan. We are trying to enhance our domain skills,” added Srinivasan.
Elaborating the expansion plan, Srinivasan said that the company plans to set up offices in the US, Asia-Pacific and Germany. Currently, around 70% of its revenue is coming from UK, while another 20% from Middle East and 10% from India. Srinivasan claimed that the company has been generating revenue from the first year of its operation. In FY08 and FY09, it has generated revenue of $0.3 million and $0.8 million respectively, and is targeting around $1.5 million in this fiscal.
FairTech currently operates two delivery centres in India, and plans to add one more in Bangalore in the next one year. It targets break-even by the end of this fiscal, and may hit the market in the first quarter of 2011 for IPO. It is also in close talks with a leading firm in this space to form a joint venture to scale up its operations.