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Auto component major Anand Group is eyeing overseas acquisitions through its flagship company Gabriel India in order to enter new markets. This follows recent similar moves by other large auto suppliers, Motherson Sumi and Sona Group.
Gabriel, the BSE-listed shock absorber maker, aims to attract new global clients with its international expansion plans. This is part of a strategy to make the company one of the world's top five ‘ride control' product makers over the next 5 years — from among the top ten currently.
Possibilities
“We've started looking at some possibilities with Gabriel for acquisitions overseas. Previously, we had not looked at global expansion as we did not want to compete with our partners. But, I think there are opportunities with Gabriel as we have the controlling stake in the company. We will use a combination of internal accruals and borrowings,” Mr Deepak Chopra, Group CEO, Anand Group told Business Line . Gabriel India shares at the BSE were down 1.33 per cent at Rs 40.95 on Monday.
The rapid growth in the domestic auto market has made the country an important destination for low-cost parts sourcing as well value engineering, with many suppliers now venturing abroad into new markets. Component makers have also been encouraged by the high-profile acquisitions of domestic automakers — Tata Motors (of Jaguar Land Rover) and M&M (of Ssangyong).
Joint ventures
The Rs 4,400 crore (2010) Anand Group, makers of various auto parts such as ACs and exhaust systems, currently has a model where it operates through around 14 joint ventures companies. Gabriel, which reported profits of Rs 45 crores on revenues of Rs 976 crores in 2010-11, currently has six manufacturing locations in the country. “In our other companies, we can expand overseas only through the joint venture. At present, many of our companies here export to our foreign partners, but do not sell to overseas customers directly,” Mr Chopra said.
Among other plans, the Anand Group is also looking for new joint ventures in the aftermarket parts distribution business, apart from launching new products such as braking systems for two wheelers. It hopes to reach a Group revenue Rs 5,150 crore by end of this fiscal, while investing Rs 250 crore in the period on expansion.
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