GE Electrical Distribution and Control (India) Pvt Ltd, a wholly-owned subsidiary of the US-based GE group, has struck a deal with AEG, a subsidiary of Germany's Daimler Benz, to take over AEG-NGEF.
AEG-NGEF was set up as a 50:50 joint venture between AEG and Karnataka's NGEF, but was later taken over by AEG in October 1997 for Rs 7 crore. AEG was allowed to retain the NGEF name for a year.
GE Electrical will pay around Rs 20 crore for AEG-NGEF. The deal is expected to be completed by early-November.
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According to industry analysts, GE Electrical is aiming to become the market leader in the electrical equipment industry, dislodging Larsen & Toubro. More acquisitions may be in the offing.
GE Electrical had acquired two divisions of GEC Alstom in July 1998 for Rs 77.5 crore.
Following the acquisitions of GEC Alstom and AEG-NGEF, GE Electrical's turnover will increase to Rs 120 crore.
AEG-NGEF has assembling and fabrication units at two locations, one of which is in Bangalore. The company has a workforce of around 600, which GE Electrical plans to retain for the moment.
It is involved in assembling switchgears (motor control and power control centres), moulded case circuit breakers, control desk panels and power and auxilliary contactors. Most of its exports are to its German parent.
For the previous fiscal, AEG-NGEF posted a net profit of Rs 1.8 crore on a turnover of Rs 40 crore, and paid 20 per cent dividend to its parent. It has a marketshare of nearly 20 per cent.
According to industry analysts, AEG's decision to sell off its major Indian operations is a fallout of Daimler-Benz virtually stopping support to AEG in the process of exiting from India.
AEG, in fact, has set up a holding company, EHG Holding, to transfer the revenues from such deals to Daimler.
GE Electrical has charted an aggressive growth strategy for the units, and is targeting a turnover of Rs 300 crore after two years.
GE Electrical had earlier acquired GEC Alstom's low-voltage components and engineering plastics businesses, which included fusegear, controlgear and switchgear products.