Promoters of NRB Bearings to rope in strategic partner
NRB Bearings, India’s fourth-largest bearings company by market size, could soon be inching towards a strategic deal.
By MV Ramsurya, TNN |
MUMBAI: NRB Bearings, India’s fourth-largest bearings company by market size, could soon be inching towards a strategic deal.
The promoters of the Mumbai-based company, the Sahneys, are likely to offload a part of their 81% stake to a strategic partner and are learnt to be negotiating with some leading industry players for the stake sale.
The sale of the promoters’ stake may be done at a premium and is in line with Sebi norms, which stipulate that promoter holding of a company should be limited to a maximum of 75% by ’08. Company sources said, while an immediate sale to bring down the promoter holding to 75% is possible, further dilution could also be possible if the premium is attractive.
Shares of NRB Bearings fell marginally by 0.3% to Rs 464.25 on the Bombay Stock Exchange (BSE) on Thursday. The stock has been down by 4.7% in the past month in a period when the midcap index of the BSE grew by 4.7%.
Interestingly, market leader Timken Corp recently indicated that it is open to acquisitions, with chairman Ward J Timken saying that India is a very important investment destination for the company.
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NRB Bearings, which accounts for about 12% of the local market sales, is one of the leading suppliers of products to the automobile industry, with almost 60% of its total production going to the two-wheeler and commercial vehicle segments.Industry sources said, the Rs 70-crore NRB Bearings expertise in making needle bearings, a highly-specialised auto component, makes it one of the fastest growing players in the sector. NRB’s profit grew by 25% to Rs 34 crore in the last fiscal year.
The other leading market major, SKF India, has also recently indicated its willingness to grow through the inorganic route. A strategic partnership in the local bearings sector is in line with trends as the sector is highly fragmented.
A recent McKinsey report says, the Indian auto component industry, which is the largest customer of bearings, has the potential to grow at a compounded rate of 30% and will reach $35-40bn by ’15. Of this exports could likely be about $20-25bn.
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NRB Bearings has already initiated measures to grow outside India. The company is scouting for opportunity to set up base in Thailand that will cater to the south-east Asian markets. While Vietnam is considered to have the fastest growing two-wheeler market, Thailand’s demand stems from its high sales of pick-ups.The company is in the middle of a capex programme of Rs 100 crore, which is being used to expand its capacity. NRB is expanding its cylindrical bearings capacity from 1.5-4m and needle roller bearings from 20-35m. The company has its facilities at Aurangabad, Waluj and Jalna.
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