Aequs plans second acquisition in Europe this year, to spend $50 million

The aerospace manufacturing firm aims to expand business

Aequs, an aerospace manufacturing firm, plans to make its second acquisition in Europe as it aims to expand business. It intends to spend as much as $50 million (Rs 320 crore) to acquire a supplier who builds systems for large civil and military planes to firms such as Airbus.

"We are looking at companies in areas where we lack gaps. Landing gear components, actuations and long bed machining," Aravind Melligeri, chairman and chief executive of Aequs, told Business Standard. "In the next two quarters, we should close a deal."

In June, Aequs acquired Paris-based aerospace component maker T&K Machine for $10 million (Rs 63 crore). T&K Machine makes components and systems for firms such as Spirit Aerosystems and Triumph Group, which supplies large systems to Boeing. With the acquisition, Aequs will get access to components for the customers through T&K. It will rename the venture as Aequs Aero Machine.

"Look at Europe; this is the best time to buy. While the economy is under stress, aerospace companies are doing well. They are immune to local economy," Melligeri said. "It is not (just) customers, it is the local footprint, local delivery ability, talent, account management."

Aequs has a manufacturing facility in Belagavi, in northern Karnataka, in a 250-acre special economic zone producing aerospace components and systems for global firms such as Airbus, Honeywell, Saab, Magellan and United Technologies.

The factories, set up in 2009 with an investment of Rs 500 crore employs over 1,000 people and makes wing parts for Airbus 380 planes. Aequs earned revenue of $25 million in 2014-15 and expects to double to $45 million in 2015-16. "We want to be a global player. What we want to tell our customers is: Why do you worry where the parts are made? Where does it come from? What you should worry is quality and if you are getting the product within the time frame," Melligeri said.

He expects consolidation in the aerospace components and supplier base in Europe and US to offer opportunities for global firms to outsource manufacturing for firms such as Aequs.

The firm, which exports nearly all of what it produces, plans to invest Rs 630 crore to beef up its manufacturing facility as it sees more orders from customers. "Global companies are reducing the supply chain. There are lot of mom-and-pop shops with revenue of $5-10 million. They want to condense, reduce the number of suppliers and hold the large suppliers more accountable," said Melligeri. "We look at this as an opportunity."

Aequs is working on 2020 strategy to be large supplier of systems in critical segments to global aerospace firms.