RSB acquires US company

Pune-based RSB Group has acquired Miller Brothers Manufacturing Inc (MBM), based in Michigan, US, for $19 mlllion through a deal which was signed by both on November 17. This is perhaps the only acquisition by an Indian entity of a profitable company in the US unlike many auto component makers there that have become bankrupt and are being bought out by companies from other countries including India.

RSB’s founder and chairman, RK Behera told Autocar Professional that MBM, with a turnover of $30 million, is in the business of manufacturing various kinds of transmission components such as planetary gear housings, propeller shaft components and overhead carriers for trucks, mining equipment and school buses. With business roots which were founded in 1946, MGM’s principal customers today include Tier-1 companies like Allison Transmission and American Axle and Manufacturing, based in the US and whose products find applications in heavy duty trucks, off-highway vehicles, SUVs, pickup trucks, among others.

MBM’s customer base and technology combined with RSB’s own strengths and core values will provide both entities with synergies. These were recognised when the former owners of MBM, a few of its customers and its key employees, visited RSB’s facilities in India months before the acquisition deal was signed. MBM, says Behera, is based around 100 miles from Detroit and is situated in a village where many of its inhabitants are employed at the company. He admits that the employees did have initial apprehensions that are only natural in the event of an acquisition.

But after some one-to-one interactions with the Indian buyers as well as the visit of a few key personnel to the facilities in India and an understanding of RSB’s own intrinsic, family-owned business values, these fears were allayed. One indicator of the strong value-based system in both is that they do not have any workers’ unions.

MBM customers, according to Behera, have also realised that this deal will add to the core competencies of the acquired company itself. He says that the volume of business being large, RSB will contribute to MBM’s supplies by making some components in India and sending them to the latter for final work and onward supply to US-based customers.

MBM’s manufacturing operations are highly automated, using latest CNC components and robotics, compared to what RSB does in India. The deal will obviously give RSB a foray into the US market and also help it imbibe some level of technology from its acquired company. RSB financed the deal through a mix of debt and equity, with $3 million being raised by it as equity and $13 million as debt from a US-based bank. Behera says that he is in no hurry to change the name of the acquired company while the Board will constitute three members from the Indian side and with two of the former co-owners continuing for some time to streamline the new status of MBM and to maintain the comfort levels of its customers.

Some months ago the International Finance Corporation had invested $7.7 mln in RSB group companies (see detailed story in August 1, 2006 issue of Autocar Professional). At that time Behera had said that it was his aspiration to see that his group attained a $ 1 billion status by 2013. Gauging from the manner in which he and his team have been strategising and working in a realistic and progressive direction, that dream could well materialise.