INDIA BUSINESS WORLD - APRIL 16th - MAY 10th - 2008
ROLEX RINGS TO BUY LATAM COMPANY FOR RS 150 CRORE
RAJKOT-based Rolex Rings (RRPL), a major forged and rolled rings supplier to leading global brands such as FAG Bearing and SKF Bearings, is all set to buy a Latin American forging company for Rs 150 crore. RRPL has confirmed that it has carried out due diligence and the deal is likely to be completed in a month.
This will give the Rs 300-crore rings manufacturer access to new markets, said RRPL MD Manesh Madeka. “We want to expand our presence in Latin America and US markets through this acquisition,” he added. The company plans to raise Rs 100 crore through private equity, while a minor investment would be supplemented through debts. It may be recalled that RRPL had raised $40 million (Rs 160 crore) by divesting 26% to a US-based private equity firm New Silk Route (NSR), to fund its expansion plans.
Through this acquisition, the company intends to expand its bottomline by the next financial year. “The synergies between us are highly commendable and we are expecting to add a few more clients in the American market during the first year itself,” said Mr Madeka. Earlier, it was considering plans to acquire a majority stake in the new forging company but subsequently decided on a complete buy out. RRPL will make use of the new company’s 250 skilled personnel to help upskill its existing 600 employees in Rajkot.
The Latin American forging company has clients in the automotive sector in southern and northern American markets. It uses new technology to manufacture various sizes of rings and forging products to cater to other sectors of industry. “European firms are looking at Indiabased manufacturers as stringent pollution norms in their country are becoming prohibitive or pushing up costs,” added Mr Madeka.
Post-acquisition, the production capacity of RRPL will jump to 1 lakh tonnes from its current levels of 60,000 tonnes per annum. It is also planning to spread its wings in the Asia-Pacific market to meet the growing demand for forging rings, with plans to achieve Rs 1,500 crore in turnover by 2011, Mr Madeka said.
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