Intermet Europe manufactures precision castings for auto industry
New entity will be headquartered in Germany
CHENNAI: Sakthi Auto Component, a 100 per cent subsidiary of Sakthi Sugars, has acquired a closely held group of companies called Intermet Europe from Intermet International of Fort Worth, Texas, U.S.
The European buy has cost Sakthi Auto Component $130 million. Intermet Europe is engaged in the manufacture of precision castings in ductile iron for the automotive industry. It has two plants in Germany and one in Portugal. These plants have a combined annual production capacity of 1.65 lakh tonnes.
Addressing a press conference here on Monday, N. Mahalingam, Chairman of the Shakthi Group of companies, said the combined entity would be known as Sakthi Automotive Group and would be headquartered at Saarbrucken in Germany. M. Manickam, Managing Director of Sakthi Sugars, would be the Chairman of the Sakthi Auto Component Group, he added.
Addressing presspersons through a videoconference, Mr. Manickam said the acquisition was funded partly by loan ($75 million). The parent (Sakthi Sugars) would contribute $10-15 million. The balance would come through the issue of preferential shares in Sakthi Auto Component.
Intermet Europe has around 1,700 people on its roll. According to Mr. Manickam, Intermet Group had, last year, posted revenue of euro 165 million. It was expected to end the current year with revenue of euro 180 million.
Mr. Manickam said the acquisition would get Sakthi Auto window to the European market besides giving it the technology access. Sakthi Auto Component owns and operates two plants in India producing ductile and grey iron precision castings, with a total capacity of 60,000 tonnes.
Laurence Vine-Chatterton, Chief Executive of Sakthi Automotive Group, said Intermet had been showing profits for several years now.It had reported earnings before interest, tax and amortisation of euro 13 million last year. The American parent of Intermet had sold the European operations so as to focus on the U.S. market.
Mr. Manickam also informed presspersons that since the U.S. parent of Intermet did not wish Sakthi to use their brand, Shakthi Auto would promote its own brand in the European market.
Mr. Manickam did not rule out further acquisition. Rationalising the current operations through integration of the Intermet would be the immediate task on hand, he added.
Asked to identify the challenges ahead for Sakthi in the wake of the European acquisition, Mr. Manickam said productivity and rejection level were two areas that needed attention at the moment.