Busy times with global buyout, group recast and private equity placement.
Getting back to the present, the recent buyout in Europe is a clear signal of Endurance’s larger gameplan. The company acquired a majority stake in Nuovo Renopress SpA which is involved in aluminium die casting and machining. Based in Bologna, the company has a turnover of 22-25 million Euro. Endurance has the option of picking up 100 percent in the next 2-3 years.
Jain explained the rationale of the acquisition to Autocar Professional in an exclusive interview. “We went in for this buyout because we found that it was a compact plant and well automated with robotics in die casting and machining. “This was the right model for us in terms of being smaller and, hence, easy to manage in an acquisition. This will be the first step before other buyouts happen,” he says.
The existing owners at Nuovo Renopress will, of course, continue as minority shareholders. As Jain says, they have done a good job but with cost pressures, needed to tie up with low cost countries. “Both our strengths will help not only with the growth of the new company but in Endurance as well. It will be a subsidiary of Endurance Technologies, the new merged entity,” he adds.
It is the creation of this new entity that is the second part of Jain’s recast strategy. The group has four companies of which the two 100 percent family-owned companies are Anurang Engineering and Endurance Transmission Systems. These two have now been merged to form Endurance Technologies. The other two companies are the subsidiaries: High Technology Transmission Systems (which is a joint venture with Adler of Italy) and Endurance Systems.
##### “The idea of this recast is to present a consolidated structure of our group with a sound networth and asset base. This will help us when we go for an IPO,” he explains.Endurance has four groups of products: castings, transmissions, suspension and braking. It sees tremendous growth potential here, both organically and inorganically. " We can always go into the four-wheeler space for proprietary components such as transmission braking. In castings, we are already in the four-wheeler space," Jain says. As part of the recast, Endurance has created a structure with an eye on specialisation. "We have taken experts in each field with a clear focus. For instance, we have roped in a professional for global sourcing,” he says.
The other spin-off with this recast was in terms of manpower logistics because departments like finance, IT, HRD etc have been centralised with a focus on the group rather than particular products. The third important initiative at Endurance has been the Rs 150 crore private equity placement with Standard Chartered Private Equity.
Jain says this is a significant step in his group’s endeavour to achieve big growth. “For this, we require funds for both organic and inorganic growth. It has also helped us benchmark our company’s valuation and is a first step to the road to an IPO ,” he says.
As part of its effort to increase global business, Endurance is in touch with leading OEMs in the US and Europe for supply of aluminium die cast components. It is setting up a marketing office in Chicago by the end of this year. “ We are also increasing our buyback through collaborators for both transmission and suspension components in a big way,” says Jain.
Two of these are Paioli Meccanica and Adler which are increasingly buying back components. “It is a win-win situation because of cost pressures and we can supply them at good prices and quality. I see Europe as a happy hunting ground,” he adds.
Back home, the company is gearing up for its Uttaranchal foray that will meet Bajaj Auto’s needs . It is investing Rs 52 crore by March 2007 in facilities related to shock absorbers, front forks, alloy wheels and clutch assemblies. “We are planning two plants which involve all these products and also die castings at a later date. In future, we will cater to Bajaj Auto’s expansion as well as four-wheeler OEMs based in the state,” Jain says.
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