The Kolkata-based Pawan Ruia Group is planning to set up Indian capacities of some of the auto-component plants that it has acquired in Europe over the last two years. The group would mark its presence in this product segment in India, either through the greenfield route or through buys.
Additionally, the Ruia group is exploring its options on a listing in Germany, of at least one of the European companies in which it holds nearly 100 per cent share or a consolidation of the companies in a holding format and a Singapore-listing.
Starting with the 2008 purchase of Schlegel, a U.K.-based sealing system company, the Ruia group has acquired four European companies, of which three are in Germany. In 2009, it bought Dusseldorf-based auto-sealant maker Henniges Grefath (now called Draftex), followed by Gumasol, a solid tyre and industrial product manufacturer-based in Germershiem and Acumen in 2011(now named Ruia Global Fastners).
Group Chairman Pawan Kumar Ruia told reporters that he was also planning to set up additional capacities for these plants in India before December 2012. “These may be through greenfield projects or through acquisition of existing companies in India.” He, however, declined to take further questions on this from a group of journalists who had recently visited four plants acquired by Mr. Ruia in Germany.
Through an asset deal announced in January this year, the Ruia group bought four plants of Acument, among Germany's oldest auto-fastener companies. Erstwhile Acument had plants in Neuss, Beckingen and Schorzberg as well as a logistics centre in Koln. It has been renamed RGF. It processes 55,000 tonnes of metal to produce 3.2 billion parts annually. It is now trying to get back some of the key customers like Diamler and Mann, which it had lost in the aftermath of the 2008 auto-industry crisis which also forced Acument to insolvency.
Although restructuring has been carried out at these companies by administrators who still hold equity stakes in some of these entities (now majorly-owned by the Ruia group) getting back to the pre-crisis levels seems some distance away. In the plants at Draftex, RGF and Gumasol, manpower has been cut, investments have been made to trim costs but still turnover is at pre-2008 levels and hard bargaining by the OEMs as well as Tier-1 and Tier-2 customers have pinned down prices.
In some of the units like the one at Neuwied (of RGF) which specialises in cold formed parts, aluminium screws and ball studs and caters to companies like Porsche, Diamler and BMW, new machinery has ushered in technology-breaks. The investment made a month back, makes this the only plant perhaps in Europe to have this technology which helps cut the cost of making a welded ball screws.
While agreeing that the companies are now on the path to recovery, Mr. Ruia feels that there is tremendous opportunity to cut cost further.
“There is lot of scope in this respect and that will help improve margins,” he said. The plan to have additional capacities of these units in India dovetails into this line of thinking. The strong labour unions in Germany are, however, unlikely to allow any outsourcing or shifting of capacities of high-tech products outside the company, it was learnt.
Keywords: Pawan Ruia