Amtek Auto readies acquisition strategy

Business Line, New Delhi | Tuesday, 5th Sep 2006

Auto components major Amtek Auto has chalked out a major acquisition strategy for both the overseas and domestic market in the current year. The company is currently in talks with 2-3 companies in Europe and the US for acquisitions.

"We are looking to make overseas acquisitions in the machining, casting and forging arena and are in talks with 2-3 companies for the same. The turnover of these companies ranges from $50 million to $700 million," Mr S. Singhi, CFO, Amtek Auto, said.

Amtek Auto currently has cash reserves of about $300 million.

"The overseas acquisitions are getting a bit delayed since we feel that the valuations are still on the higher side.

"Valuations of manufacturing firms in the Western markets have gone up over the past year or so due to interest shown by companies based in India, China and South-East Asia. However, we feel that the valuation will come down in the near future," Mr Singhi added.

Domestic front

Amtek's domestic acquisition, however, is likely to work out much sooner. The company is in talks with 1-2 firms in the machine auto parts domain for acquisition.

"On the domestic front, we are looking to acquire smaller companies. The acquisition should materialise in the next 1-2 months," Mr Singhi said.

Amtek Auto had only last month acquired the connecting rod assembly line of Amforge Industries Ltd for about Rs 10 crore.

The asset buyout is expected to add about Rs 50 crore to Amtek Auto's revenue in the current year. The company has since relocated the rod assembly line to its unit in Gurgaon.

Amtek has already made about eight acquisitions over the past four years.

Meanwhile, auto analysts add that Amtek Auto is also undertaking a consolidation exercise under which all the companies under Amtek Group will be brought under Amtek Auto.
 

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