After German company\'s acquisition recently, Precision Camshaft is hungry for more

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Carmen 1 2021-05-06

A year ago, Precision Camshaft (PCL) - a Rs 500-crore company based in Solapur - made history by  possibly becoming the only supplier of camshafts to Toyota. The Japanese major is traditionally known to make camshafts, which are used in engines, internally.

Last week, PCL added another feather in its cap with the acquisition of Germany-based Motoren und Fahrzeugtechnik GmbH (MFT) which is into niche machined cylindrical and prismatic parts supplying to Volkswagen, Audi, Opel, BMW. The company has a turnover of Rs 160 crore.

Yatin Shah, chairman and managing director, PCL spoke to Moneycontrol about the idea behind the acquisition. An excerpt from that conversation:

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Q. What will the MFT acquisition bring to the table of Precision Camshaft?

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A. We were scouting around for companies that engaged in niche but critical components for the automotive industry. A company that is healthy, well run and has potential to grow. We had a very strong wishlist and MFT qualifies all those. It has a fantastic customer base, even those which PCL is not catering to, at the moment. This brings a diversification to the product portfolio. If you look at the acquisition of MEMCO in Nashik and this one clearly indicates how we are diversifying our portfolio.

Q. What is the acquisition price and the equity stake bought?

A. We are bound by a confidentiality clause so unfortunately that is something we are not able to disclose. Because we have signed right now in Germany. At some point in time the company would agree to reveal the details.

Q. The product range that MFT has will they be made at your plant later in India?

A. No. What we are looking for is to continue doing those products there because they are machined products, they don』t do any castings of forging. Because of the current promoters' limitations they were not able to scale. So we bring to the table the finance that is required for scaling up. PCL is going to establish its camshaft in MFT as we go forward so that we can serve locally to Europe.

Q. How much is PCL going to invest in MFT?

A. In the next three weeks, we would be meeting all the major customers of MFT. By this we would understand which customer is requiring how much of supplies in the coming period. In 2-3 months we would undertake an exhaustive study on understanding the potential of MFT. Unless we learn about the requirements of its customers it is difficult to quote an investment figure.

Q. The buy-out comes at a time when globally the trend is moving towards electrification.

A. MFT deals in some products that are required in internal combustion (IC) engines. But there is lot of noise and talk about electrification. We don』t perceive electrification to be a threat in the medium term at all. The amount of investment that Daimler, BMW and VW are making for IC engines which goes till 2028-29 gives us the confidence that this investment will certainly pay off.

Q. Are you looking at any more deals like MFT?

A. We are certainly look for more. We are still hungry. Yes we do have talks with a few companies. We have earmarked certain amount of money for acquisitions and the search is still on for the right company. We raised $20million through PCL Netherlands. That money and our own internal accruals will be used for acquisitions.

Q. From PCL’s stand-point nothing serious on the EV front?

A. I can tell you that we are looking at it very seriously. But anything more than that will be very premature at this stage. Last year, the world saw 400,000 EV sales compared to 72 million IC engine vehicle. It’s going to be an uphill task

Q. Will you be a debt-free company this year?

A. We will be a debt-free company by June 2018. We are very much on target. At the net debt level we will be debt free by this month end. The debt is Rs 40 crore at the moment.

Q. What about your global expansion like in Brazil?

A. The Brazilian plant in on track. We would be finishing setting up the facility by end of May this year. And then the machines would start coming in and the commissioning would start towards end of October and hopefully we would go into production by end of December or January.

本文來源:https://www.moneycontrol.com/news/business/auto/after-german-companys-acquisition-recently-precision-camshaft-is-hungry-for-more-2537123.html

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