Eye Rs 24000 cr revenue aided by acquisitions: Amtek Auto

But Flintham is confident of these acquisitions, that will be closed by December 2014, and says all of it will aid shareholders earnings per share (EPS).

Below is the verbatim transcript of John Flintham's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: Could you take us through what the earnings have been for the company this time and your latest acquisitions as well?

A: If you look at our earnings for the quarter, its been very satisfying quarter with close to Rs 4,000 crore of revenues holding the EBITDA between 21.5 percent and 22 percent over Rs 850 crore.

In terms of our yearly figure year on year this is a tremendous performance, growth revenues of about 86 percent, EBITDA increases in the region of about 74 percent and PAT is 87 percent on a year on year basis. Our revenues are split between 60 percent in India and 40 percent outside of India and our margins overseas are running at about 10-11 percent.

Our acquisitions have contributed significantly. As you are aware from the last interview Neumayer Tekfor when we purchased was doing an EBITDA of about 6.5 percent. We are now close to 11-11.5 percent, which is double in the EBITDA on flat sales which is an excellent performance.

Kuepper Group has only been in the group six months, it’s somewhere in the first stage of synergising that company within the Amtek organisation and so we are expecting that Kuepper to come in this current financial year which is a new financial year.

Sonia: Tell us about the new companies that you have decided to acquire?

A: The Amtek organisation have agreed to purchase three businesses in the auto sector – two in Germany and one in South East Asia. The total revenues for these businesses would be over Rs 2,000 crore and it is exciting in the locations. The German businesses will supplement and support our overseas operations primarily in Germany and we become very strong in Germany now.

The one in south East Asia opens up whole new market for us, so excellent news. These acquisitions are in very synergist markets to us in the casting, forging and machining fields. I cannot give many more information due to confidentiality. We are due to close these businesses by the end of the first quarter of this new financial year.

Latha: How much did you pay for the acquisitions and how did you get the cash?

A: As I said I cannot release any more financial information due to confidentiality as we are in the middle of closing these deals. Unfortunately you have to wait a bit now. I will come and tell you those details when we close the businesses, but to get back to your revenue question, if you analyse the Kuepper for 12 months post these new three acquisitions – that takes the group to an annualised figure of about Rs 18,500 crore and if you add modest market growth of less than 10 percent then that is going to take as close to Rs 20,000 crore in this coming year which is very much inline with our forecast of hitting within two years, our target is to take this business to about Rs 24,000 crore.

Latha: Will the new acquisitions be earnings per share (EPS) accretive from the first year?

A: All of them will be shareholder enhancing. We have a very good track record in what we pay for businesses and these are no exceptions. They will be revenue enhancing and profit enhancing from day one. Therefore, I would expect to start seeing some of the benefits that come through in Q2 of this financial year, the new financial year.

Sonia: You were telling us about the strength that you will have in the German market but can you elaborate a bit on what are the geographies these companies are present in?

A: Two of the companies are in Germany, in Europe and very synergistic with our existing German businesses and one is in south East Asia. As I said before they are into casting, forging and machining which is our core technology and the south east Asia part will open up quite a good non-auto market for us in that region.

Sonia: Can you give us a sense of what the blended margins of the consolidated entity will look like. Will you see a dip post these acquisitions?

A: Yes, because the overseas EBITDA margins are less than our Indian margins we will see a reduction in the blended EBITDA between 19.5-20 percent from the current position of 21-22 percent, but that’s just a calculation. Our forward looking business will more than likely to be about 15 percent outside of India and 50 percent inside India, which gives us a good balance against the cycles.

Latha: Shifting focus to your other company Ahmednagar Forgings. Can you detail the highlights of the quarterly earnings and what we can expect in the second half?

A: Year on year the sales of Ahmednagar Forgings has done extremely well. We are now talking about Rs 2,400 crore business dedicated in the forging industry with an EBITDA of about 620. So over the year that’s 33 percent increase in revenues and 35 percent increase in EBITDA. We have increased the capacity slightly by around 45,000 tonne which will start coming through in the next year. We have got focused strategic plan for this business to grow in the non-auto business. The non-auto business is currently around 20 percent and we can see that moving to 30 percent within this financial year. Margins are slightly better in the non-auto business so that will be underpinning the performance going forward.

Sonia: How you have managed to fund these acquisitions and what does your debt level stand at currently?A: I cannot share any financial details due to confidentiality. I will be giving you the details as soon as I can when we close the deals.