MSI, situated in the city of Tessenderlo, presently manufactures heavy fabrication aggregates for excavators, off-highway machines and windmills which are similar to the products of RSB manufactured in its Jamshedpur, Dharwad and Chennai plants. Both MSI and RSB have identical technology, process and machines. Caterpillar Belgium and Caterpillar France are the major customers of MSI, just as Caterpillar India is one of the prime customers of RSB.
The acquisition of majority stake in MSI provides immense synergy benefits to both RSB and MSI. RSB, with 10 state-of-the-art manufacturing plants spread over seven locations in India and the US, exports heavy fabrications to Europe. It can now have a front-end presence in Europe to consolidate and grow its exports. European customers will now find it easier to do business with RSB. Moreover, heavy fabrications which were otherwise logistically impossible to ferry from India to Europe can now be offered by the RSB-MSI combine.
The sub-assemblies will be manufactured in India and the final assembly and finishing work can be done at MSI. Thus more value-added products can be offered by RSB which has already commenced exports to Terex Europe. With this association RSB expects to deepen its engagement with Terex.
The RSB-MSI association will also be leveraged by MSI to secure additional business from Caterpillar with which both RSB and MSI are otherwise engaged individually. Likewise, for some of the products presently manufactured by MSI, certain sub-assemblies can be outsourced to India to derive cost benefits.
The RSB-MSI combine will be able to leverage each other’s capabilities and thus add new customers to their respective businesses both in Europe and India. This coming together is thus beneficial to both of them to expand their top line and improve their bottom line.
Incidentally, both RSB and MSI have DIN 18 800-7, class 7 welding qualification and are thus advantageously positioned for the global heavy fabrication business.
It may be recalled that in November 2006, RSB Transmissions had acquired the Michigan-based Miller Brothers Manufacturing, since rechristened RSB NA, a specialty auto transmission component manufacturing company. The group has successfully managed this acquisition, and hence even during the last two years of deep recession, RSB NA has been both PBT and PAT positive.
RSB Transmissions had a turnover of $167 million in 2009-10 and is aiming to hit $222 million in 2010-11. It is also planning to go for an IPO sometime in the last quarter of 2010 to fund its ambitious growth plans.
