The Hindu Business Line : Autoline Ind to benefit on diversification, new clients

The acquisition of Dura Automotive Systems, US, is strategic for Autoline Industries on two counts. For one, in line with the company’s strategy of product diversification and entry into high-value segments, the acquisition will bring the jack and toolkit business of Dura into its fold. Two, it will give the company access to high profile clients such as General Motors, Ford, Honda and Nissan.

Inorganic Route

Autoline is primarily in the business of moulding sheet metal for various assemblies, which is a high volume and low value auto component business. To move up the value chain and improve its margins, the company has been attempting to upgrade its product mix by providing larger and more complex assemblies, silencers and exhaust systems, it has also grown through the inorganic route.

It exports sheet metal components to Stokota, a Belgium-based manufacturer of tankers, tippers and trailers in which it holds a 51 per cent stake. Besides, it has also ventured into the niche segment of design engineering by acquiring a majority stake in Michigan based Detroit Engineering Products.

These acquisitions, including the present one, give the company access to global auto majors. Acquisitions such as these allow the company to capitalise on the trend of large auto manufacturers outsourcing component supplies to low-cost countries like India; it will also help broadbase the company’s portfolio.

Autoline may also be able to adopt a ‘dual shore manufacturing model’ under which offshore locations can be used as a technical hub with emphasis on design and manufacture of high-value components, while Indian facilities are used for high-volume production due to the cost advantage.

For the company, this inorganic growth strategy brings in three benefits — optimisation of costs, a larger product portfolio and geographic diversification.

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