Indian auto component major Suprajit Engineering will increase its cable production capacity by another 25 million units by acquiring the US-based Wescon Controls.
Suprajit is one of the largest automotive cable makers in the world with 16 plants, of which 15 facilities are in India and one in the UK. The company’s customer list includes most Indian automotive majors and exports to many marquee global customers.
The company has acquired Wescon Controls, which is a leading manufacturer of control cables in the non-automotive Outdoor Power Equipment (OPE) space. It has customers like MTD, Husqvarna, John Deere, TORO, Honda and is the largest manufacturer of OPE cables in North America.
In a post-acquisition conference call organised today, K Ajith Kumar Rai, chairman and managing director of Suprajit Engineering said, the company has increased its annual cable capacity from 75 million to 225 million cables in the past 5 years. The company’s majority of 97 percent business comes from the automotive sector while the remaining 3 percent from the non-automotive segment.
With the acquisition of Wescon Controls, Rai said the share of non-automotive cable business will increase to 20 percent while the total cable production capacity will increase to 250 million units per annum.
Addressing a query from Autocar Professional during the conference call session, Rai said the company will utilise its automotive cable engineering technology in Wescon products. And also Suprajit has well established supply chain in India, other Asian countries and Europe and these facilities will be benefit for Wescon.
Suprajit made the acquisition through its wholly owned subsidiary Suprajit USA Inc, by purchasing 100 percent outstanding equity share capital from Shell Topco LP managed by a Private Equity Fund - Nova Capital, UK.
Wescon, which has its plants in Wichita, Kansas, USA and in Juarez, Mexico, has been manufacturing cables since 1946. It has a strong management and engineering team with a leading market position in the North American non-automotive cable space.
This transaction was funded by Suprajit’s cash balances and debt in an approximate ratio of 50:50. The Enterprise Value of Wescon was estimated at $ 44.4 million.
Rai also said that Wescon is a perfect strategic fit for Suprajit. Wescon’s market leading position in North America in the OPE segment is a significant sectoral de-risk for Suprajit in its core business of cables. This will also prepare a solid ground for Suprajit to continue to increase its exposure in both automotive and non-automotive business in the Americas.
Michael Bright, CEO of Wescon Controls, said, “The strategic fit of Wescon with Suprajit Engineering, along with the complementary capabilities of the two companies, make this a compelling opportunity. It offers a strong platform to support Wescon’s growth into other nonautomotive segments and to expand our geographic reach outside of North America.
Further with the added strength of Wescon, new plants in India and judicious augmentation of capacities across its plants, Rai said that Suprajit will emerge as the second largest cable maker in the world in the near term.
It may be noted that Surprajit has acquired five companies in the past 10 years including Wescon. Suprajit acquired Shah Concabs in 2002, CTP Gills Cables, United Kingdom in 2004, automotive cable division of Pricol Limited in 2014 and Phoenix Lamps in 2015.
The company is keeping options open for further acquisitions. “When there is a right fit and opportunity, we will think about inorganic growth,” Rai concluded.