The Hindu Business Line : Intermet buy to help Sakthi Auto bolster presence

Coimbatore, Sept. 4 Four months after buying out Intermet Europe from Intermet International, USA, the Chairman of Sakthi Auto Component Group, Mr M. Manickam, appeared confident of taking the Group to greater heights.

“We have handed over the operations to the German team. The integration work is on. The full impact of the acquisition will be known only after 6 months to a year,” he told Business Line.

Sakthi Auto Component (SAC), a wholly owned subsidiary of Sakthi Sugars, acquired Intermet Europe, which, according to Mr Manickam, was at least four times bigger than SAC.

Global presence

The European buy cost SAC $130 million. “It has given us a global presence,” the SAC Group Chairman said.

Asked if he had no apprehension about taking over a much bigger unit, he said: “No. We got all the fits right, and the takeover has supported the growth. The Group’s productivity and quality levels are up. We now have a phenomenal bandwidth, which did not exist earlier.”

He says the induction of the European team on the board gave the Group more comfort. “While such acquisition propositions are generally viewed as technology transfer initiatives, one has to agree that they are far superior in technology and much bigger in size. We had from the beginning decided not to shift production to India. We are only looking at growing both operations independently.”

Different models

Stating that there was no overlap of customers or product, he said “the only integration has been in technology and management. It is a different model altogether.”

“We have separated ownership and management. We respect the management team and they have accepted our ownership,” he continued.

Asked if SAC acquired a loss-making unit, he said: “No. The parent company – Intermet International, USA sold out their European operations and we bought the same.”

Asked if any more takeover was in the pipeline, Mr Manickam without ruling it out, replied that the Group was open to options, but there was nothing concrete at present. “We will stabilise first,” he added.

Post-acquisition, SAC Group has two plants overseas, at Germany and Portugal with a combined annual production of 1.65 lakh tonnes.

The production capacity of SAC’s plants in India at Mukasi Pallagoundenpalayam in Erode district and the other in Coimbatore is about 40,000 tonnes/year.

“SAC’s India operations have almost doubled with the acquisition of Bonomi. We are strengthening our presence.”

On performance, he said the Group clocked a turnover of Rs 200 crore (from its India operations) and about Rs 1,100 crore (European operations – and that too partial takeover) last year. “We are targeting Rs 1,500 crore next year,” he said.

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