Chennai, July 13, 2012: Tube Investments of India Ltd., (TII) flagship company of the Murugappa Group with multiple businesses ranging from diversified auto-ancillary products, bicycle retailing to financial services and insurance, has signed a share purchase agreement to acquire 44.1% stake in 'Shanthi Gears Ltd.’ a leading manufacturer of industrial power transmission products, headquartered in Coimbatore, India. Consequently, TII will be making an open offer to the extent of 26%. Total cost of the acquisition including the public offer is expected to be Rs. 464 Crores assuming full response to the proposed open offer pursuant to SEBI regulation.
Shanthi Gears Ltd manufactures a wide range of products that include gears, gear boxes, geared motors and gear assemblies. It has been designing, manufacturing and supplying various kinds of gears and gearboxes to various industries for a variety of applications for the past four decades. The Company has manufacturing operations in Coimbatore spread across 6 units including a Foundry Division and markets its products in India and abroad. Turnover of the Company was Rs. 178 crores in FY 12 with a Profit After Tax of Rs. 28 crores. The Company is a Debt Free Company as on March 31, 2012.
Commenting on the strategic fit of this acquisition, Mr. MM Murugappan, Chairman, Tube Investments and Vice Chairman, Murugappa Group, stated that “Shanthi Gears is one of the largest organized players in India in the gears segment and its product profile is targeted towards more of niche products and greater customer retention. We hope to leverage our understanding of the engineering space and our existing customer relationships to help scale the business further”
Announcing the acquisition, Mr.L Ramkumar, Managing Director, Tube Investments stated that “Addition of Shanthi’s product portfolio substantially enhances our ability to service other industry segments and reduce our reliance on the Auto sector, at the same time growing our presence in the value added businesses.”
About Tube Investments of India Ltd.
Tube Investments of India Limited is the flagship Company of Murugappa Group. The Company has 18 manufacturing/assembly units spread across the country. The Company’s shares are listed on the National and Bombay stock exchanges in India. The Company’s major products are Precision Cold rolled strips and welded tubes , Drive and Industrial Chains, Door frames, other metal formed products, E-Scooters, Fitness Equipment and Bi-Cycles.
TI is the market leader in precision tubes with 55 percent market share by virtue of its quality and application engineering capabilities. It is the market leader in roll formed car doorframes with 60 percent market share by virtue of its cost efficiency, association with key auto majors and roll forming capabilities. TI is a leading player in automotive chain with 40 percent market share by virtue of its quality, cost and delivery and association with two wheeler majors. The company is also a leading player in bicycle segment around 30 percent market share by virtue of its brand equity, product development capability and proximity to the markets.
TII is the promoter of Cholamandalam Investment Finance Company Ltd. and Cholamandalam MS General Insurance Company Ltd and holds equity stake of 54.5% and 74% respectively.
TII reported a total revenue of Rs 6456 Cr on a consolidated basis with a PAT of Rs 269 Cr for the year ended 31st March 2012.
About the Murugappa Group
Founded in 1900, the Rs. 22314 Crores (USD 4.4 billion) Murugappa Group is one of India's leading business conglomerates. The Group has 28 businesses including eight listed Companies actively traded in NSE & BSE. Headquartered in Chennai, the major Companies of the Group include Carborundum Universal Ltd., Cholamandalam Investment and Finance Company Ltd., Cholamandalam MS General Insurance Company Ltd., Coromandel International Ltd., Coromandel Engineering Company Ltd., E.I.D. Parry (India) Ltd., Parry Agro Industries Ltd., Tube Investments of India Ltd., and Wendt (India) Ltd.
Market leaders in served segments including Abrasives, Auto Components, Cycles, Sugar, Farm Inputs, Fertilizers, Plantations, Bio-products and Nutraceuticals, the Group has forged strong alliances with leading international companies like Groupe Chimique Tunisien, Foskor, Cargill, Mitsui Sumitomo, Morgan Crucible and Sociedad Química y Minera de Chile (SQM). The Group has a wide geographical presence spanning 13 states in India and 5 continents.
Renowned brands like BSA, Hercules, Ballmaster, Ajax, Parry’s, Chola, Gromor and Paramfos are from the Murugappa stable. The organization fosters an environment of professionalism and has a workforce of over 32,000 employees.