Solapur-based auto component manufacturer Precision Camshafts Ltd has agreed to acquire a 51% stake in Dutch electric driveline maker Emoss Mobile Systems BV for 7.36 million euros (Rs 58 crore or $8.65 million) in cash.
Precision will buy the stake through Dutch unit PCL (International) Holding BV, the company informed the stock exchanges on Friday. It will finance the deal through a combination of bank debt and internal
accruals.
Emoss’ promoters will hold the remaining 49% and stay actively involved in day-to-day activities, Precision said.
The deal does not require any government or regulatory approvals.
Shares of Precision declined 0.71% on the BSE on Friday to close at Rs 98.05.
The deal in Emoss marks Precision’s third strategic acquisition in eight months. In March, the company announced the acquisition of a 76% stake in Germany-based precision machinist MFT Motoren und Fahrzeugtechnik GmbH in an all-cash deal for an undisclosed amount.
Last October, the auto component maker had acquired 95% stake in Nashik-based MEMCO Engineering Pvt. Ltd for an undisclosed amount.
Precision-Emoss deal
Precision’s stake purchase in Emoss will help the Indian firm make an entry into the electric vehicles and equipment business besides newer geographies such as Europe, North America and Australasia.
“This (deal with Emoss) will not only diversify the product portfolio into the non-internal combustion segment, but also add another dynamic and growth-oriented segment to the portfolio of acquired companies,†Precision’s announcement read.
Oosterhout-based Emoss designs, develops, produces and supplies complete electric powertrains for trucks, buses, military vehicles and heavy equipment. Its clients include DSV, Ferrovial, Geesink Norba,
Heineken, Mellor and Waste Management New Zealand.
Emoss recorded a turnover of 5.94 million euros (about Rs 50 crore) for the calendar year 2017. Through the deal, it will capitalise the financial bandwidth of PCL for its working capital requirements to drive future growth. In addition, PCL’s global sales and engineering network as well as manufacturing knowledge will help Emoss scale rapidly.
Emoss has visibility to scale the business five times in the next four years, Precision’s announcement read.
Emoss, which was formed in May 2014, also manufactures “ready-to-assemble modular kits†which are assembled onto the chassis by the end customer.
“The electric vehicle market has grown significantly over the past decade with a special emphasis on the commercial electric and niche services segment,†said Precision’s chairman and managing director
Yatin Shah after the latest acquisition. "We are looking at capturing a significant share of the commercial electric vehicle market globally."
Precision Camshafts
Precision was listed in February 2016. The company raised about Rs 410 crore through the initial public offering.
The company makes about 150 varieties of camshafts for passenger vehicles, tractors, light commercial vehicles and locomotive engine applications at its plants in Solapur. The promoters are first-generation entrepreneurs who started the business of manufacturing critical engine components in 1992.
Besides its recent acquisitions, Precision also has two joint ventures. The first, Ningbo Shenglong PCL Camshafts Company Ltd, is for machining of camshafts and the second, PCL Shenglong (Huzhou)
Specialised Casting Company Ltd, is for setting up a foundry in China.
Most of its revenue comes from export of camshafts to original equipment manufacturers directly and indirectly. The company supplies more than 150 varieties of camshafts for passenger vehicles, tractors,
light commercial vehicles and locomotive engine applications. PCL exports 78% of its total production to five continents and caters to approximately 9% of the global market.
Its key clients include Ford Motors, General Motors, Toyota, Maruti Suzuki, Hyundai, Daimler and Porsche.
Precision is yet to announce its fourth quarter and full-year financials for 2017-18. The company reported Rs 6.65 crore in net profit for the three months ending December 2017 on revenue (from
operations) of Rs 93.04 crore.
In the quarter ended September 2017, its net profit was Rs 9.73 crore on revenue of Rs 100.57 crore.