Financial Daily from THE HINDU group of publications
Tuesday, Oct 18, 2005
Financial Daily from THE HINDU group of publications Tuesday, Oct 18, 2005 |
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Corporate
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Mergers & Acquisitions Omax Auto set to acquire US firm Neha Kaushik
New Delhi , Oct. 17 OMAX Autos is set to join the growing league of Indian auto components manufacturers that are acquiring companies in the overseas markets. The company is on the verge of taking over an auto component firm in the US. Informed sources peg the size of the deal at approximately Rs 100 crore. Omax has appointed KPMG as advisor for the acquisition. The company is likely to raise funds for the acquisition by issue of securities abroad. The Rs 536-crore Omax currently manufactures sheet metal tubular and machined components for the automobile industry. Analysts point out that the overseas acquisition would help the company boost its export revenue and acquire new clients in the North American region. Omax's exports have grown exponentially in the past few years. The company's exports had increased from about Rs 3.3 crore in 2003-04 to Rs 15 crore in 2004-05. In fact, the company's exports are expected to more than double in the current financial year. It is also in the process of setting up an EoU in Binola, Gurgaon to take advantage of strong outlook for exports. Industry analysts point out that Omax plans to leverage on its relationship with Delphi and Tenneco to take advantage of the outsourcing boom and is working on increasing its share of business from these key clients. Auto components companies in the West, which are unable to profitably compete with lower cost bases such as India and China, have over the past few years become logical acquisition targets for Indian component firms that are seeking to expand and broadbase their client portfolio. The last couple of years have seen about 12 such acquisitions. The acquisitions also help Indian companies to acquire technological know-how. Recently, Bharat Forge bought Imatra Kilsta AB of Sweden, along with its wholly owned subsidiary Scottish Stampings at a market estimated price of Rs 250 crore.
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