Craftsman Automation - Expansion Plans

Coimbatore-based Rs 252-crore Craftsman Automation, which has been catering to commercial vehicle majors like Tata, ALL, Mahindra and
Daimler, is on expansion mode.

As part of re-branding, it has decided to shed its existing logo and make Craftsman Marine, Craftsman Motion (gearbox) as sub-brands under mother company Craftsman Automation. The company is in the advanced stage of talks with a private equity player to partially fund its expansion plans.

"We are looking to infuse funds to the tune of Rs 150 crore to develop the company and we expect around Rs 75 crore to come from private equity," Carftsman MD S Ravi told. He said, the company will widen its current automotive business and build up its material handling, marine business and gearbox manufacturing within the next three years.

While the core automotive business will be spread over its manufacturing facilities in Chennai, Pithampur (MP) Jamshedpur (Jharkhand) and Coimbatore, the engineering business will be restricted to the texcity. "We are looking to double the current production capacity of 1000 engine blocks and 1000 engine heads per day across all the factories in three years ," he added.

The company is also planning to add new locations in Pune, Northern Capital Region (Haryana) and Uttaranchal soon. Mr Ravi expects the material handling business, for which he has signed a JV with German-based load suspension equipment manufacturers Carl Stahl, to grow in the coming fiscal. "We entered the market only 18 months back and we will soon compete with world leader Demag in this segment," he said.

Last year, he floated a subsidiary, Craftsman Marine in Netherlands, which develops, constructs and sells a range of marine engines and technical equipments for pleasure crafts and smaller commercial vessels. This apart, he has a JV with Mitsubishi Corporation, Japan for sales and service of EDM machines in Coimbatore.

A first generation entrepreneur, Ravi has won several awards including export promotion council’s annual export awards for the last three consecutive years. He is looking at re-jigging his businesses by shifting focus to the domestic market. From a turnover of Rs 195 crore in 2007-08, Craftsman grew to Rs 252 crore in 2008-09.

This year, due to the impact of global recession, Ravi expects to close with around Rs 200 crore. "But, we expect a 30% growth in 2010-11," he said, adding the company has an EBITDA margin of around 20% to 25%. Its net profit after tax is around 6% to 8%.

"The expected drop in turnover this fiscal is mainly due to slowdown in exports. So from 75% dependence on exports, we are going to restrict our foreign exposure to 30% now," Mr Ravi said, adding the setting up of manufacturing plants by global automotive giants in India has also helped him to focus on the domestic market.