Autoline Industries Ltd, a provider of design, engineering and manufacturing services to the domestic automobile industry, is gearing up to expand its operations by acquiring companies in related businesses.
It is in advanced talks with a US-based maker of sheet metal-based assembled products with $25 million (Rs102.5 crore) in sales. The firm is also in initial talks with a European sheet metal component supplier which it is interested in acquiring, Autoline chairman Gopal Patwardhan said.
Last year, the firm signed a memorandum of understanding with Belgian company Stokota NV, to pick up a 51% stake for Rs65 crore, but the deal did not materialize due to technical reasons.
“We are currently identifying companies that have the right fit with our business so that we can bring technology from the acquired companies to India, manufacture here and supply their existing customers from India instead of managing operations in other counties,” said Patwardhan, adding his company was also looking at domestic firms.
Autoline is also simultaneously going up the automobile industry value chain and is setting up a commercial tool room to complement its design capabilities. It will manufacture large toolings and dyes for the domestic auto industry. Indian auto manufacturers including Bajaj Auto Ltd, Mahindra and Mahindra Ltd, and Tata Motors Ltd are dependent on import of tooling for their requirements from countries such as Taiwan and South Korea. “India does not have large-sized tool manufacturers with large capacities. By setting up a commercial tool room, we will help auto OEMs (original equipment manufacturers) reduce time to market and also help them to save costs,” Autoline joint managing director M. Radhdakrishnan said.
The 50,000 sq. ft commercial tool room being set up in Chakan, Pune’s emerging auto hub, at an investment of Rs10 crore, will be ready by January 2008 and the company hopes at least 20% of its design work for OEMs will continue to the tooling phase, giving them margins of up to 40%.
The company already does design work for OEMs such as Nissan Motor Co., Volkswagen AG and Hyundai Motor Co. through Detroit Engineered Products Inc., a US-based firm in which it picked up a 51% stake for $7.65 million in May.
Autoline is also working on expanding its design capabilities and is currently developing a range of proprietary products for the auto industry, Patwardhan said.
“Designing is our special strength and having our own range of products gives us much better margins than just being a manufacturer for auto companies,” he said.