The acquisition of Shanthi Gears will help Tube Investments tap into the non-auto space significantly, said Mr L. Ramkumar, Managing Director, Tube Investments.
The non-auto sectors currently make up 27 per cent of Tube Investments’ total turnover. This is expected to get a boost with the addition of Shanthi Gears which has a diversified portfolio across non-auto sectors such as power and infrastructure, said Mr Ramkumar.
The acquisition will also help Tube Investments expand its industrial power transmission business. Under industrial power transmission, Tube Investments makes industrial chains and sprockets for two-wheelers. Incidentally, its industrial chains business was also added through the acquisition of French company Sedis.
“Shanthi Gears, with its varied product range and technology, is a good synergy to make this portfolio more robust and give access to a larger customer base,” said Mr Ramkumar.
Shanthi Gears will closely align with Tube Investments’ metal forming division which produces door frames, automotive chains and industrial chains, he said. Metal forming products posted a turnover of Rs 859 crore in 2011-12. Industrial chains account for a very small portion of this division.
“With Murugappa’s management style, Shanthi Gears will have good prospects going forward,” said Mr Ramkumar.
The employees at Shanthi Gears are expected to be retained. The company is still discussing on senior management and other restructuring which the gears company may require.