Larsen & Toubro Ltd, India's biggest engineering firm, wants to acquire a US or European business that will add to its expertise in setting up projects such as petrochemical plants and refineries.

　　Larsen, founded in 1938 in India by Danish engineers Henning Holck Larsen and Soren Toubro to market dairy equipment, has budgeted as much as US$75 million to buy an engineering consultancy, N. Sivaraman, vice president of mergers and acquisitions at Larsen, said in an interview.

　　"It will help us provide a complete value chain to our customers and reduce our bidding and execution risks," Sivaraman said in Mumbai, where the firm is based. He declined to say which firms Larsen was targeting, or whether the firm has held any negotiations.

　　Indian companies from software maker Wipro Ltd to aluminum makers such as Hindalco Industries Ltd are acquiring production, engineering and design capabilities abroad as they begin to tap overseas markets. Indian companies last year bought 36 businesses overseas for about US$800 million, according to Bloomberg Data.

　　Larsen, which is turning its cement business into a separate company, CemCo, and selling a stake in the unit to rival Grasim Industries Ltd, plans to focus on expanding its main engineering business.

　　At home, the company is also bidding for Engineers India Ltd, a state-owned engineering consultancy.

　　Acquisitions of companies such as Engineers India "will be positive for Larsen because it will complement their business," said Sukumar Rajah, who helps manage the equivalent of US$3 billion in equities and bonds at Templeton Asset Management.

　　Larsen's engineering and construction business, with revenue of 61.5 billion rupees (US$1.4 billion) last year, had orders in hand of about 150 billion rupees on September 30. Since then, the company has disclosed orders worth at least 18.9 billion rupees to build power plants, supply nuclear power equipment and upgrade refineries.

　　The firm tries to raise revenue from overseas contracts to 30 percent of the total by 2006. Last year, revenue made overseas was 21 percent of the total.

　　Larsen, which does business in Kuwait, Saudi Arabia and the United Arab Emirates as well as in African countries such as Tanzania, is looking for business in Iran and Iraq as well as in Thailand, Sivaraman said.

　　"If Indian companies are allowed into Iraq, Larsen & Toubro will be the major beneficiary," said Arun Thirumalai, an analyst with Batlivala & Karani Securities in Mumbai.