By R Srividhya Jan 29 2012 , Chennai
Distressed assets up for grabs in Europe
Europe’s ongoing debt crisis may well turn out to be an attractive shopping opportunity for Indian engineering and auto components companies. Many distressed assets in Europe, especially in the engineering and automotive hubs of Germany, Italy and France, are up for sale, and Indian companies are keen to make acquisitions that will facilitate their wider global presence.
PE and VC firms admit that they are working on such deals, and at least a handful expected to close in the next one-two months. Only two weeks ago, Aurangabad-based component maker Varroc Group acquired 80 per cent in Europe's largest two-wheeler headlights and taillights maker TriOM. Around the same time, JBM Group acquired Italy-based engineering services company Tesco Go.
Spurred by the advent of major carmakers to India over the past 20 years, India has built a formidable domestic components industry with a turnover of $40 billion that is projected to grow at 11 per cent annually to $113 billion by 2021, manufacturing electrical parts, equipment, suspension and braking parts, body and chassis, engine parts, and drive transmission and steering systems. Automotive Components Manufacturers’ Association (Acma) projects the industry’s total investments at up to $2.5 billion during FY12, up from $2.3 billion in the previous year. Exports are projected to grow from a little $5 billion now to $29 billion in 10 years.
“The valuations of companies in Europe are quite attractive now. Indian companies can make acquisitions there, get access to new technology and clients and move manufacturing units here as factory production is more expensive in Europe,” Jacob Kurien, partner, New Silk Route pointed out.
The company has been advising Rajkot-based hot forged rings maker, Rolex Rings for an acquisition or a joint venture in Europe.
“In the months to come, we expect a lot of overseas M&A activities to happen in the engineering and auto components space. We are advising a few deals ourselves,” C Venkat Subramanyam, founder and director of investment bank Veda Corporate Advisors told Financial Chronicle. Veda provides advisory services in the private equity and M&A space.
“For companies having the strategic perspective
to expand, this is a good time to look for an European buy.
The acquisition will give Indian companies a good global platform, advanced technology and production base in that part of the world and in proximity
to clients,” said Nishant Arya, executive director, JBM Group.
JK group company and maker of industrial belts Fenner (India) is looking to buy companies that have similar technology and customer access in different locations in
Europe, according to
the its president AN Ravichandran.
Valuations may be attractive and access to newer technology easier through such acquisitions, but getting the right cultural and technological fit is also important when making such acquisitions, industry members said.
“We have been seeing industry members scouting for acquisition opportunities in automotive hubs right from Germany to as far as Macedonia. But companies should also look at a merger that is seamless operationally, legally and culturally,” asserted Vinnie Mehta, executive director, Acma.
It would be wrong to make an acquisition just because it’s available cheap, industry members said. Recently, Kolkata-based Ruia group ran into trouble while taking control of its recent French acquisition, Preciturn,
after local workers opposed the move.
"I do not know if the current EU situation will cause more opportunities for M&A. Rane would still look at acquisitions more from a strategic fit rather than mere low valuation," reasoned L Ganesh, chairman of leading auto component house Rane Group.
As per the latest financial data available with company data provider Capitaline, 99 listed auto components companies have posted a combined annual turnover of Rs 68,862 core, with net profit of Rs 4,011 core.
Of these companies with more than billion-dollar turnovers are Motherson Sumi (Rs 8,175.63 crore; exports 61.88 per cent), Sundaram Clayton (Rs 7,229.68 crore; exports 15.3 per cent) and Bosch (Rs 6,699.11 crore; exports 12.76 per cent). Other major components makers include, Exide, Tata AutoComp Systems, Amtek Auto and Amara Raja Batteries.
(With inputs from G Balachandar in Chennai and Amit Mudgill in New Delhi)
(Source : http://www.mydigitalfc.com/news/auto-parts-firms-see-scope-shopping-351)
Distressed assets up for grabs in Europe
Europe’s ongoing debt crisis may well turn out to be an attractive shopping opportunity for Indian engineering and auto components companies. Many distressed assets in Europe, especially in the engineering and automotive hubs of Germany, Italy and France, are up for sale, and Indian companies are keen to make acquisitions that will facilitate their wider global presence.
PE and VC firms admit that they are working on such deals, and at least a handful expected to close in the next one-two months. Only two weeks ago, Aurangabad-based component maker Varroc Group acquired 80 per cent in Europe's largest two-wheeler headlights and taillights maker TriOM. Around the same time, JBM Group acquired Italy-based engineering services company Tesco Go.
Spurred by the advent of major carmakers to India over the past 20 years, India has built a formidable domestic components industry with a turnover of $40 billion that is projected to grow at 11 per cent annually to $113 billion by 2021, manufacturing electrical parts, equipment, suspension and braking parts, body and chassis, engine parts, and drive transmission and steering systems. Automotive Components Manufacturers’ Association (Acma) projects the industry’s total investments at up to $2.5 billion during FY12, up from $2.3 billion in the previous year. Exports are projected to grow from a little $5 billion now to $29 billion in 10 years.
“The valuations of companies in Europe are quite attractive now. Indian companies can make acquisitions there, get access to new technology and clients and move manufacturing units here as factory production is more expensive in Europe,” Jacob Kurien, partner, New Silk Route pointed out.
The company has been advising Rajkot-based hot forged rings maker, Rolex Rings for an acquisition or a joint venture in Europe.
“In the months to come, we expect a lot of overseas M&A activities to happen in the engineering and auto components space. We are advising a few deals ourselves,” C Venkat Subramanyam, founder and director of investment bank Veda Corporate Advisors told Financial Chronicle. Veda provides advisory services in the private equity and M&A space.
“For companies having the strategic perspective
to expand, this is a good time to look for an European buy.
The acquisition will give Indian companies a good global platform, advanced technology and production base in that part of the world and in proximity
to clients,” said Nishant Arya, executive director, JBM Group.
JK group company and maker of industrial belts Fenner (India) is looking to buy companies that have similar technology and customer access in different locations in
Europe, according to
the its president AN Ravichandran.
Valuations may be attractive and access to newer technology easier through such acquisitions, but getting the right cultural and technological fit is also important when making such acquisitions, industry members said.
“We have been seeing industry members scouting for acquisition opportunities in automotive hubs right from Germany to as far as Macedonia. But companies should also look at a merger that is seamless operationally, legally and culturally,” asserted Vinnie Mehta, executive director, Acma.
It would be wrong to make an acquisition just because it’s available cheap, industry members said. Recently, Kolkata-based Ruia group ran into trouble while taking control of its recent French acquisition, Preciturn,
after local workers opposed the move.
"I do not know if the current EU situation will cause more opportunities for M&A. Rane would still look at acquisitions more from a strategic fit rather than mere low valuation," reasoned L Ganesh, chairman of leading auto component house Rane Group.
As per the latest financial data available with company data provider Capitaline, 99 listed auto components companies have posted a combined annual turnover of Rs 68,862 core, with net profit of Rs 4,011 core.
Of these companies with more than billion-dollar turnovers are Motherson Sumi (Rs 8,175.63 crore; exports 61.88 per cent), Sundaram Clayton (Rs 7,229.68 crore; exports 15.3 per cent) and Bosch (Rs 6,699.11 crore; exports 12.76 per cent). Other major components makers include, Exide, Tata AutoComp Systems, Amtek Auto and Amara Raja Batteries.
(With inputs from G Balachandar in Chennai and Amit Mudgill in New Delhi)
(Source : http://www.mydigitalfc.com/news/auto-parts-firms-see-scope-shopping-351)
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