Auto parts firms see scope for shopping

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)

Ruia’s takeover bid for German auto component maker fails

Meteor Gummiwerke was, by far, the biggest by revenue in a series of acquisitions announced between May and September last year


Manish Basu


Kolkata: Chartered accountant-turned-takeover specialist Pawan Kumar Ruia has washed his hands of Meteor Gummiwerke KH Badje GmbH and Co.—an embattled German automotive component maker that he was to acquire from a trust representing its controlling shareholders—after he failed to inject cash for a rescue.

Ruia had in May last year announced that he had concluded a deal to take over Meteor Gummiwerke for an undisclosed price, described by the German firm as “symbolic” in one of its statements.

Pawan Kumar Ruia, chairman, Ruia Group. Indranil Bhoumik/Mint

The acquisition of this firm, along with two others announced in close succession last year, would have catapulted the Ruia Group to a leadership position in manufacturing rubber sealing systems for the automobile industry.
Meteor Gummiwerke was, by far, the biggest by revenue in a series of acquisitions announced between May and September last year.

But, strapped for cash, the Ruia Group had to abandon almost all the acquisitions one by one—in France, Turkey and Germany—of rubber sealing system makers it had announced in 2011.

Meteor Gummiwerke had in 2010 earned €222 million (Rs. 1,438.5 crore today) in revenue from the sales of rubber sealing systems to car makers such as Bayerische Motoren Werke AG (BMW), Daimler AG, Fiat SpA, Renault SA and Porsche Automobil Holding SE.

Founded in 1954, Meteor Gummiwerke has three plants in Germany, two in the Czech Republic and one in the US. It employs at least 2,500 people.

After the Ruia Group failed to infuse cash to revive it, Meteor Gummiwerke on 13 January filed for bankruptcy and an administrator was appointed by a German court, according to a statement issued by the administrator.

The Ruia Group’s takeover of Meteor Gummiwerke was to be concluded in early October. The firm had even posted a statement on its website saying the deal had been concluded, with the Ruia Group paying shareholders the price agreed upon and bringing in the cash it had committed to revive the firm— an indication that the deal collapsed at the 11th hour.

In an emailed statement, the Ruia Group said: “(At) the time the management (of Meteor Gummiwerke) decided to take the company to insolvency (administrator), Ruia Group was neither in management of the company nor any shares were transferred to it.”

Emails sent to Burkhard Bruhl, Meteor Gummiwerke’s chief executive officer, were not answered.

The insolvency administrator is currently helping Meteor Gummiwerke find a new buyer, and the Ruia Group is “out of the game”, according to Hildesheimer Allgemeine Zeitung, a German newspaper.

A contract was signed but did not become effective because the Ruia Group did not pay, said a spokesperson for the insolvency administrator in an emailed statement. As a result, Ruia never became the owner of the company.

Christopher Seagon, the administrator, “is now stabilizing the business operations and will likely set up a process of finding a new investor,” he added. A statement by Seagon earlier said the firm’s Czech and US subsidiaries had been kept out of the insolvency proceedings.

In October, Ruia had said his acquisition of Standard Profil AS, a Turkish firm, was “under review” in the light of the “global economic slowdown”. He later admitted to have abandoned the proposed acquisition. The Ruia Group had announced its plan to acquire Standard Profil in May.

Last month, the Kolkata-based group headed by Ruia also lost control of a key unit of Groupe Preciturn, a French auto component maker that it was to acquire. In early December, one of Groupe Preciturn’s units was declared bankrupt and seized by a commercial court in France.

In India, the Ruia Group is under fire from tyre maker Dunlop India Ltd’s creditors. The group acquired Dunlop in 2005. A number of creditors have filed wind-up petitions in the Calcutta high court seeking appointment of an administrator to take over Dunlop’s assets. The company has suspended operations and has asked the court for time to prepare a repayment plan.

In an interim order, the court restrained Dunlop from transferring its assets, scuppering the Ruia Group’s plans to transfer to itself the rights to 100-odd trademarks currently owned by the beleaguered tyre maker.

(Source : http://www.livemint.com/2012/01/24001030/Ruia8217s-takeover-bid-for.html?h=B)

Kinetic Engineering to launch two new gearboxes

17 JAN, 2012, 09.07PM IST, IANS


NEW DELHI: Auto component manufacturer Kinetic Engineering on Tuesday said it will role out two new gearboxes for different customers.

"We have two very important programmes which are ready to role out. We have finished the developments in the last 18 months," Sulajja Firodia Motwani, vice chairperson, Kinetic Engineering, told IANS.

"One (product) is the gearbox for Piaggio Ape four wheeler. It's a new platform which will be launched. And a second new completely assembled gearbox for Mahindra Navistar trucks which will roll out in the next two-three months," Motwani said on the sidelines of a FICCI event.

The company did not divulge the investments made for the products, but said existing facilities and synergies were utilised in developing the new offerings.

According to Motwani, the company is focusing on bring in new technologies in the powertrain and transmission segments in the next few months because the Indian markets is changing. "Our focus is on the transmission (segment) and we do hope to bring out new technologies in this areas. And in the next few months you may see some new announcement."

Bullish on the Indian automobile market, she said, "Indian auto industry remains a very attractive markets for us. We mainly serve segments like two wheelers, three wheelers and commercial vehicles which are growing quite well."

On the Nano project in which the company supplies the complete shaft, gears and transmissions components to Tata Motors, Motwani said the company had been invited to quote for the diesel version of the car. "Nano is growing well and we are very bullish on the car. We have been invited to quote on the diesel Nano as well."

The company had invested Rs.60 crore for setting up a component line for the Nano at its Ahmadnagar facility. "We are supplying from Ahmadnagar. We had discussed with Tata Motors for a potential assembly unit in Sanand. Discussion are still on."

On exports, the company said its main markets in US and Europe have stabilised after the free fall of 2008-09. "I would say it (exports) went through a difficult period in 2008-09, but exports have been stabilised now," added Motwani.

(Source : http://economictimes.indiatimes.com/news/news-by-industry/auto/auto-components/kinetic-engineering-to-launch-two-new-gearboxes/articleshow/11527359.cms)

Amtek shares gains on talks of raising $200 million through FCCB

18 JAN, 2012, 01.11AM IST, SHAILESH MENON,ET BUREAU


Shares of auto ancillary manufacturer Amtek India surged over 2% to Rs 99.25 on Tuesday amid talk that the company is planning to raise over $200 million through a foreign currency convertible bond issue.

The proceeds will be used for business expansion, a Mumbai-based broker said.

Company officials, when contacted, said they have the necessary board approvals to raise overseas funds.

"We've received permission from the board to raise funds, but we've not finalised anything as of now," said Arvind Dham, managing director of Amtek India, which makes iron-cast components for two- and three-wheelers, passenger vehicles and commercial vehicles.

(Source : http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/amtek-shares-gains-on-talks-of-raising-200-million-through-fccb/articleshow/11530119.cms)

Auto parts maker Anand Group has Defence sector in crosshairs

ROUDRA BHATTACHARYA
NEW DELHI, JAN. 12:

Auto component major Anand Group is actively looking to enter the defence sector as a parts supplier.

The Group is in talks with a few companies for a likely joint venture and may even set up a dedicated entity for the business.

The “investment and gestation” periods are higher in the sector, Mr Sandeep Balooja, President, Global Business Development, Anand Automotive told Business Line. “The (defence) industry has a lot of potential. The standards are much higher for the precision components, but the margins are also good. We're discussing at this point, as this will have to be a different mindset for us,” Mr Balooja said.

The company is particularly interested in the defence aviation business as it feels it already has certain synergies in the area. It is eyeing the Government-mandated offsets clause for local manufacturing and technology sharing from the upcoming defence deals, such as the one on fighter planes.

AEROSPACE

“Aerospace could be preferred because of partnerships, but we are interested in all areas. We could start initially with opening an engineering centre for defence. The issue is the limitation of FDI in the sector, which limits foreign participation,” he said.

The Anand Group incidentally also operates two resorts as another separate business interest. However, its core interest is in auto components — it operates 19 companies, and 14 joint ventures with major global brands — and manufactures shock absorbers, exhausts and brake systems among others.

The group expects turnover to increase by 21 per cent this fiscal, to Rs 5,100 crore. In 2012-13, it expects a growth of 16-17 per cent. And, by 2015, the sales target is Rs 10,000 crore.

“We're looking to get into electronic components. That is the future for the business. We're not adding any fresh capacity this year; all our expansion plans are already complete,” Mr Balooja said.

(Source : http://www.thehindubusinessline.com/companies/article2795885.ece?ref=wl_opinion)

High tech auto manufacturing Paapam chief seeks Indian investment

By: Salman Abduhoo | January 12, 2012 |

LAHORE – Pakistan Association of Automotive Parts & Accessories Manufacturers Central Chairman Syed Nabeel Hashmi has said that PAAPAM is seeking for technical collaborations with Indian companies for high tech auto parts manufacturing in Pakistan.
On his return from visit to India, Nabeel Hashmi while talking to The Nation, said that Paapam was looking forward to develop contacts with Indian manufacturers, besides analysing the possibility of joint ventures with them.  He said Pakistan Association of Automotive Parts & Accessories Manufacturers had organised a 50-member delegation visit to India to study the Indian Automotive Industry.
He said that delegation visited India to introduce its members to the international markets and build up their businesses keeping in view the global economies and scales.
He said Auto expo New Delhi was an important part of the Indian auto sector and our Pakistan delegates had ample opportunity to see their own Indian counterparts and study their products.
He said our targets were to see if we can benefit from competitive raw materials and machinery that may be procured from India. But we prefer technology based trade rather then just finished goods coming into Pakistan, he reiterated. On a question, he said that non tariff barriers (NBTs) imposed by India, were also creating hurdles for the Pakistani manufactures to export even those products which were competitive in the Indian market.
According Nabeel Hashmi, PAAPAM has the potential to meet the demands of the country’s auto industry and that there is no urgent need to import items from neighbouring countries. The dependence on local production will help the country’s auto industry. Auto parts industry currently employs 175000 persons at auto parts venders and over 8000 in various assembly plants, he said.
He said that PAAPAM has its serious reservations over the imports of ‘parts’, only the raw materials for the sector should be allowed to be imported from the neighboring country.”
Briefing about his visit, he said that Pakistan High commissioner Shahid Malik welcomed the PAAPAM delegation at the Pakistan High Commission where views on trade with India and MFN status issues were discussed. Participants included M Shafique-ur-Rehman Councellor, Brig Sarfraz S Chaudhri Defence & Army Adviser and Naeem Anwar Minister Trade High Commission for Pakistan.
The Ambassodor Shahid Malik appreciated the value addition being done by PAAPAM members to the Pakistan economy and noted his full support to the engineering base of Pakistan. He assured the delegation of taking cognizance of Pakistan’s local industrial setup and its concerns whilst discussing opening of trade with India.
Paapam Chairman Syed Nabeel Hashmi asked Shahid Malik that the association shall always welcome manufacturing and technology based investments from India. Further all trade opening should be two ways rather then one way. PAAPAM’s concerns on Indian NTB’s were also made know to the ambassador. The delegation was also received earlier with full protocol at the Autoe Xpo 2012, New Delhi by Mr Vinnie Mehta, Executive Director of the Automotive Component manufacturers Association of India. The Chairman Paapam Syed Nabeel Hashmi whilst expressing the associations delight to be at the EXPO discussed future participation possibilities of Pakistani Autoparts manufacturers in 2014 and also asked ACMA to participate at the PAKISTAN AUTOSHOW 2012 being held in Karachi later this year. Exhibitors from 22 countries participated in the show which included Autoparts makers, Global Car, two wheelers, Trucks and Buses were on display. Over 50 new varieties of new cars and transport vehicles have being officially launched at the show. Famous global brands including Mercedes Benz, Range Rover, Chrysler, Rolls Royce, Renault, Honda, Toyota, Suzuki, Volk Wagon, Ford, Mann, Jaguar, Harley Davidson put up their best pavilions against local indian brands Mahindera, Bajaj, Hero and TATA. Entry to the show had to be restricted to 100,000 visitors per day due to the overwhelming response of the public.

(Source : http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/12-Jan-2012/high-tech-auto-manufacturing-paapam-chief-seeks-indian-investment)

Outlook for Indian auto components sector stable in 2012:Fitch

NEW DELHI: Ratings firm Fitch today assigned a stable outlook to the Indian auto components sector in 2012 and said it is expected to perform well on the back of demand from original equipment manufacturers for localised content.

"Indian auto suppliers' credit profiles would largely remain stable in 2012, underpinned by the increasing focus of original equipment manufacturers (OEMs) on localisation. The latter would also prevent any sharp drop in revenue growth," Fitch Ratings said in its report, '2012 Outlook: Indian Automotive Suppliers'.

The latest report comes a day after Fitch gave stable outlook to the Indian auto sector and forecast passenger vehicle sales volumes to grow by 3-5 per cent and the commercial vehicles (CVs) segment by 8-10 per cent during the year.

The report said the current depreciation of the Indian rupee is likely to benefit auto suppliers in two ways.

While it will increase the cost-competitiveness of exports and prompt OEMs to go for local sourcing of components, it also presents an opportunity for domestic firms as India is a net importer of auto components.

The rupee has depreciated by over 16 per cent against the US dollar so far during the current financial year.

According to Fitch, exposure to different segments of the domestic automotive industry will help diversified auto suppliers' insulate operating cash flows.

However, it warned that smaller companies catering to limited products or market segments are likely to be more affected until the macroeconomic situation improves.

"The focus on localisation by OEMs, in an attempt to curtail costs and diversify the geographical spread of suppliers, would drive the growth for auto supplies amid subdued auto sales," Fitch India Associate Director Pragya Bansal said.

Nevertheless, Fitch said for deriving benefits from localisation and rupee depreciation, component-makers would have to make significant investments in capacity and capability-building.

"The investment needs for capitalising on the opportunity seems very large in relation to the internal cash accruals of most of the suppliers, prompting the need for external sources of funds. This would drive up debt for most of the suppliers, though some part of this could also be funded by way of fresh equity," the report said.

Fitch also said bilateral and regional trade agreements being negotiated between many countries could potentially change international trade flows over the medium-to-long term.

"Such free trade agreements could hurt the Indian auto suppliers' export potential on one hand, while adding to the competitive intensity in the domestic market, though their impact would only be seen in the longer term," it said.

(Source : http://economictimes.indiatimes.com/news/news-by-industry/auto/auto-components/outlook-for-indian-auto-components-sector-stable-in-2012fitch/articleshow/11447525.cms)