Usha Martin Ltd, the world’s second-largest maker of wire rope, is close to acquiring a European distribution company which will give it a greater access to more lucrative wire rope market in the continent.
Rajeev Jhawar, managing director, Usha Martin, said the investment in the deal will be small, involving about $2-3 million (Rs8.2-12.3 crore). He declined to give further details.
However, he added that this investment would be an incentive to expand the manufacturing base. The company will be pitching in about $15 million over the next three years to raise the UK plant’s current capacity of 6,000 tonnes per annum (accounting for just 7% of Usha Martin global production) to 10,000 tonnes per annum.
The distribution arm that Usha Martin is looking to acquire, will push the company’s turnover in Europe past the $100 million mark, said P. Bhattacharya, joint managing director, Usha Martin. The various operations of the company in Europe generate a revenue of about $84 million, he added.
The company also plans to enter China, opening a liaison office at Shanghai or Guangzhou to sell its high-end speciality ropes in China. Company officials said they are open to the idea of setting up a production base in China if the market warrants it.
“It is fine to jump into the bandwagon headed to China, but my interest is greater in Europe, which offers the high-end market,” said Bhattacharya. He added that Brunton Shaw UK Ltd, the company Usha Martin acquired in 2001, earns about $3,000 on each tonne of wire rope that it makes.
On the other hand, Usha Martin’s Indian products earn only $1,600 a tonne. The difference is primarily because Brunton Shaw operates in a niche branded segment, catering to the high-end market. Bhattacharya feels a need to capitalise on the European niche operations offering ropes for mining, cranes, elevators and nylon-coated wires.