Continental buys Vege Europe

Continental Engine, based at Gurgaon in NCR, has acquired the European operations of the Netherlands-based Vege Motors for an undisclosed amount.

The company is planning to acquire within a year the US operations of Vege as well.

Continental's acquisition comes after more than 10 Indian auto component makers have already acquired companies abroad in the last two years.

A 60-year-old company Vege Motors is in the business of rebuilding used engines, gear boxes and turbochargers.

"Vege's European operations in Holland and Tunisia employ over 125 people. Vege Europe reported a loss of Rs 15 crore for its last financial year sales of Rs 200 crore (¤40 million)," said Alok Dutta, chief executive officer, Continental Engine.

Contrary to its performance, Vege Europe has a good brand value in Europe. The company is related to the dealerships of well-known European car makers like Audi, Volkswagen and BMW.

The company has seven marketing offices in countries such as Italy, France, Spain, England and Sweden.

"Continental has plans to acquire Vege US by the end of the next calender year. We have got time till June 2006 to make a call option regarding the acquisition of the US operations," he said.

The US operations of Vege makes profit of about Rs 10 crore on sales of Rs 300 crore.

Continental Engine is a 20-year-old niche player in the segment of engine components. The company is 100 per cent owned by the Bakshi family, which is in the construction and real estate business.

"Nearly 90 per cent of our sales are met through exports. We export to assembly lines of car makers like Peugeot, Nissan and Kia in Iran. Piaggio Motorcycles, VM Motori and Deutz are our other clients. Continental also exports to engine rebuilders for companies such as Volkswagen, Toyota and Mazda," said Dutta.

The company makes parts like cylinder head, crank case, engine block and manifold - all made of aluminium. It has a foundry and machine shop at Bhiwadi near Delhi.

For the year ended March 2005, Continental has posted a net profit of Rs 34 crore on sales of Rs 125 crore.

The company's clients in India include Hindustan Motors, Mahindra & Mahindra, Eicher, Greaves, LG and Swaraj Mazda.