With the acquisition of German fasteners manufacturer Acument GmbH & Co KG, the Pawan Ruia group has extended its footprint into auto ancillaries. Chairman Pawan Kumar Ruia speaks to Probal Basak on his plans to bring the fasteners business in India and add Indian automobile manufacturers to the client list. Edited excerpts:
With the acquisition of Germany’s Acument, you have entered the business of manufacturing automotive fasteners. What’s your expectation from this new venture?
When we observed this auto component company, specialised in automotive fasteners, we noted that in India there are only one or two companies in the organised sector making this. I felt there was a huge gap between demand and supply and this could be a very good acquisition. The company was technologically very advanced and having almost all important customers in Europe, like Volkswagen, Daimler, General Motors, BMW, Ford, in its client lists. And, all these have their presence in India, too.
Ruia Global Fasteners (the new company incorporated by the group after acquiring Acument) is going to play a very important role in Ruia Group’s vision to move to a great extent in the auto ancillary segment.
After acquiring a controlling stake in UK and German automobile sealing manufacturers (three, since 2008), you are bringing the same line of business to India with your upcoming plant in Pune. Will you be bringing the fasteners business to India, too?
Absolutely, we would like to. If we get some companies for acquisition, that will be very good, as we will start one step ahead. We will try and acquire some in the near future. If we can’t acquire, then we would like to build up a new plant here. I think in two years, if not earlier, we will be able to do so.
Are you planning to add Indian automobile companies to your client roll?
Of course, we would like to. There are companies like Tata and Mahindra. We will explore all possibilities, whether we will import from Germany or wait for setting up a plant here. We can do both simultaneously.
This is Ruia Group’s third acquisition in Germany. What is so special about Germany?
I have always felt that German parts are really very good. Qualitatively, they are very strong. Some way or the other, they have really fascinated me with their technology and discipline. The auto world is controlled by the Japanese and Germans. All the major auto companies in the world like BMW are based in Germany. So, if a company is already accepted by these major auto companies, then it means you have a readymade market. What you have to do is only reconstruction of the plant, as the customers are already there.
You are already in the automotive space with your tyre, sealing and fasteners business and you were in the fray for acquiring South Korean SUV maker Ssangyoung, which eventually went to Mahindra. Any other major acquisition you are eyeing?
There is a great growth opportunity in India. India is adding 20 km per day, literally, in its investment into road and infrastructure. In the 11th five-year plan, India will spend $1 trillion in the sector and $26 million is the auto component market right now, which will go beyond $120 million (annually) by 2020. Auto and auto ancillaries both have good growth prospect. We will try and acquire more companies. We will try and make our presence felt in the world market.
What is the status at the Sahaganj factory (of Dunlop Tyres) now? Have operations stabilised? Is the factory running at full capacity?
The Sahaganj plant is not yet stabilised. We are working towards stabilisation. We have small production in that area, there is a challenge of going in full production. I think this will take some more time to run it at full capacity.
But we are at a stage where we can come out. We don’t want to jump into making a major investment there for the time being. We will think of additional investments, may be after six months, only after things are stabilised.
It’s said that you have got expertise to turn around sick companies. How do you react to this?
We can only say that we have got some of the management skills to turn around a company. We are confident that if a matter comes to us, we will work it out, as we have got some experience.
What is the growth strategy? What will be the contribution of your tyre, sealing and fasteners business?
The focus is to add some more companies to the group, may be in India or may be in Germany or any other place in the world. We have got a sealing business in Germany and the UK, and work is also on in our Pune plant. We would like to increase our market share, adding some more plants. As we have also taken over a fastener company, we will also try to increase market share for fasteners.
On the Indian operations of the tyre business, we are adding additional capacity in our existing plants. And, if we get any opportunity, we are open for any acquisition.
