Amtek Auto scouts for cheap assets in India, Europe
Wednesday, 21 December 2011
21 Dec 2011;business-standard.com:Mumbai: Auto parts maker Amtek Auto Ltd, India's second largest forging maker, is keen to take advantage of the economic slowdown in India and Europe by bidding for cheap assets, Chief Financial Officer Santosh Singhi said. The Amtek group has cash reserves of close to Rs 1,500 crore, which Singhi said could be used as the basis to acquire forging, machining and casting businesses. one year is the right time to buy assets. We are looking at the domestic market as well as Europe, but valuations are high," Singhi said. "We think markets will trend downwards in 2012 . We are exploring if there is a right opportunity for cheaper assets," Singhi said. Analysts expect a new phase of consolidation in Indian auto parts industry after a quiet few years as the economy slows and companies that expanded in the boom time seek to reduce debt. So far, high expectations of promoters of takeover targets have thwarted many potential deals. Amtek itself has grown through a string of acquisitions both in India and overseas, mostly between 2004 and 2008. "At the moment, the overseas deals we are exploring are mostly in Europe," Singhi said. The company, which has said it plans to boost revenue to about $3 billion by 2015 from $342 million now, remains bullish on the domestic auto market. Car sales in India have been nearly flat this year after rising 30% in 2010/11 ended March. "India is still a good market, though Europe is flattish and we are seeing only marginal growth," Singhi said. "In India, growth is still being seen in LCVs (light commercial vehicles) and two-wheelers." Sales of commercial vehicles, a key indicator of economic activity, rose 35% to 66,264 in November, while motorcycles rose 22.7%. However, car sales fared much worse rising 7% in November and falling 3.5% from April-November. Rising finance costs and increasing prices have deterred buyers while a labour unrest at India's top carmaker, Maruti Suzuki, crippled production. Amtek, which ranks second behind Bharat Forge in production of forgings, is a major supplier to local and global automakers, including Maruti, Tata Motors, Hero Motor Corp, General Motors, Ford and BMW. At 1:39 pm, shares in Amtek Auto, valued about $415 million, were down 0.05% at Rs 93.85 in a firm Mumbai market.
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