Rane group to foray into aerospace, defence

Auto component manufacturer Rane Group is planning to foray into defence and aerospace sectors and would look at acquisitions for technology.

L Ganesh, vice chairman, Rane Holdings Ltd, said the group was actively looking at defence and aerospace segments, adding, “if it makes sense to go for a joint venture by roping in a new partner, we will certainly look at it”.

He also said the company was open to inorganic growth. “If we get good opportunities, we will look for acquistions for both technology and capacity. As our customers go global we will also follow them. For capacity instead of greenfield, we can look at acquisition model,” said Ganesh.

Describing the first half of 2010-11 as “very good” for the industry, Ganesh said the group would go ahead with its capacity expansion plans with an increased outlay of Rs 300 crore for the year.

“After the global slowdown in 2008-09, which was also felt in Indian industry for 5-6 months, exports came down and schedules dropped by 30-50 per cent, except in two-wheelers,” he said. But this year, “All segments grew by 20-23 per cent during the period and the indication of growth is pretty strong.”

He noted that the group's initial capex plan for 2010 – 11 was Rs 270 crore. Because of strong demand, it has been revised to Rs 300 crore, of which around Rs 160-170 crore already been spent, according to Ganesh.

With the investment, power steering capacity will be expanded to 60,000 units a month from 40,000 units, while manual steering capacity at 700,000 for the year will be increased to one million units this year.

Two new lines of engine valves have been added at its Tiruchi unit, one of which has already been commissioned and the second would be commissioned in February 2011. The increased capacity is expected to raise production to two million units this year.

In brake linings and friction materials, the capacity would be increased by 25 per cent at Tiruchi and Hyderabad plants. The group companies include Rane (Madras) Ltd, Rane Engine Valve Ltd, Rane Brake Lining Ltd, Rane Diecast Ltd, Kar Mobiles Ltd and joint vetures – Rane TRW Steering Systems and Rane NSK Steering Systems Ltd.

Ganesh said the group's turnover outlook for the year was Rs 1,800 crore initially, which has now been revised to Rs 2,000 crore based on the trends and sales till date. Currently, 72 per cent of the group turnover comes from OEMs, 17 per cent from the replacement segment and 11 per cent exports.

Ganesh added that since the US and European markets started showing recovery in demand, export contribution could increase to 15 per cent.