Aurangabad-based auto component maker Endurance Technologies has bought two aluminium die-casting companies in Europe for €40 million (Rs 230 crore). The acquisition is meant to bring the customers, technology and business of these three companies into its fold.
The privately-held company has also bought a 40 per cent stake in Paioli Meccanica, its Italian collaborator for making shock absorbers, for €6 million (Rs 34.46 crore), with an understanding to increase the stake at a later stage.
The two die-casting firms are Nuova Renopressn SPA, based in Bologna, Italy and Amann Druckguss GmbH & Co, based near Stuttgart, Germany. Both make aluminium die cast components; the latter is a more niche player and hence enjoys higher margins.
The Italian company, which has a turnover of €25 million, has a good technology base and boasts of customers like Honda, Bosch and Siemens. The company was acquired for around 5 million euros, inclusive of debt.
The German firm, with a turnover of around €40 million, has customers like Daimler-Chrysler, Porsche, MAN, Behr, John Deere and Audi.
"We needed to go global to acquire customers and technology. They supply to many auto manufacturers in Europe. As many of these automakers are entering India, the acquisitions provide us with an entry point to them here," said Anurag Jain, CEO, Endurance Group in an interview with HT.
"This helps you become their first choice," he added.
"We will leverage our low-cost large manufacturing base with Amann's high-technology, knowledge and customer base," said Jain. For instance, it can ship aluminium castings from India, which can be machined and supplied in Europe. All three are profitable companies, enjoying net margins of 3-6 per cent.
The Rs 1,500-crore group, which raised Rs 150 crore in August 2006 from Standard Chartered Private Equity Fund, plans to hit the market in the next 18-24 months. KPMG, which helped it raise private equity, was the advisor for the acquisitions.
The acquisitions have been funded through a mix of internal accruals, proceeds of the private equity sale and debt, much of which will sit on the balance sheet of the acquired companies, said Endurance CFO Sunil B Bedekar.
The Endurance Group, which started as a small supplier to Bajaj Auto in 1985, today makes die casting products, which brings 50 per cent of its revenues, and suspension, braking and transmission systems, which brings in the rest and 18 plants across the country, with a majority of them being in Aurangabad.