assignment elecon1

8/8/2019 Assignment Elecon1

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ASSIGNMENT

ON

Acquisition of

Benzlers-Radicon Groupby

Elecon Engineering Company Ltd

Submitted by:

Kesharpu Sekhar

PG20095518


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On October 28th

, 2010 Elecon Engineering Company Limited , Indias largest Material

Handling Equipments, Industrial Gears and Transmission Products manufacturer , today

announced the acquisition of the Benzlers-Radicon Group (BR group) for GBP 21.41 million. This

is Elecon's first acquisition. Elecon Engineering will take full control of BR Group by the end of

November, 2010

Established in 1951, Elecon Engineering Company Ltd of Vallabh Vidyanagar, Gujarat, India,

pioneered the manufacture of material handling equipment. The company has grown over the years to

be known as a pioneer of the concept of mechanized way of Bulk Material Handling Equipment in India.

During the span of more than 5 decades, Elecon has encompassed all the major core sectors through its

supplies of highly sophisticated equipment bearing ample testimony of the symbolic mark of Elecon's

unbeatable technology.

The Benzlers-Radicon Group has over 60 years of experience in engineering high quality, industrial

transmission. They are a sister company of David Brown and are part of the DB Gear Systems group of

companies. They have a reputation as being one of the market leaders in the design and manufacture of

screw jacks, shaft mounted gearboxes and industrial reducers. The company comprises of 3 business

units: UK based Radicon; Sweden based Benzlers and David Brown in Thailand.

This acquisition will now strengthen Elecons product development and engineering capabilities

and widen its customer base in European, North American & Scandinavian countries. Two of Elecons

group companies have combined to make the acquisition i.e. Elecon Engineering Co. Ltd. and Power

Build Limited (PBL) wherein Elecon Engineering has acquired the European, North American & Swedish

business and PBL has acquired the Asian business.

Elecon's market capitalisation as on October 26, was around Rs 905 crore. Its turnover this fiscal

is expected to be nearly Rs 1,300 crore while that of BR Group would be Rs 220 crore. Post-acquisition,

Elecon expects its exports to grow 15 per cent.For the first two quarters of 2010-11, ended September

30, Elecon's turnover was Rs 526 crore, a growth of 12.44 per cent compared with the corresponding

period last fiscal, while its PAT was Rs 27.5 crore, up 42.8 per cent. It currently has an unexecuted order

book worth Rs 1,501 crore.


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THE DEAL:

y The acquisition was funded by 20 per cent internal accruals and 80 per cent bank loans. SBICapital was the merchant banker for the deal.

y Elecon, through its special purpose vehicles (SPVs) is acquiring the BR Group of businessesfrom David Brown Gear Systems Group. This business is a sub-group of David Brown and was

owned by a private equity (PE) fund, Clyde Blowers Capital, which acquired it in 2008. Thus

Elecon is buying BR Group from Clyde Blowers. The transaction is a combination of share and

assets purchase.

BENEFITS:

y It would provide an ideal gateway for Elecon group to enter the European & Asian Markets. Inaddition, the BR group also has a strong presence in the US through David Brown Group

subsidiary, Cone Drive. With this acquisition Elecon will get a platform to grow its exports to a

larger international base.

y The Benzlers and Radicon brands are amongst the most recognized in the powertransmission industry globally. The Radicon brand is the generic name for worm gearboxes in

many markets. The addition of these brands to Elecon will provide a competitive edge and

allow Elecon to enjoy a premium price.

y By combining engineering excellence with BR group, Elecon will now be able to bring theadvantages ofeconomies of scale in the manufacturing processes and reduce costs across the

supply chain. Elecon will continue to delight customers by offering applied engineered

products and improve profitability.


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assignment elecon1

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