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Mark Exhaust acquires 2 companies worth $3 million

Two years back, when the spectre of a slowdown loomed large on the domestic automotive industry, the Gurgaon-based sheet metal component maker Mark Exhaust Systems Limited (MESL), changed tack by focusing more on acquisitions and diversification w...

Updated: Sep 26, 2014, 12.47 PM IST
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We welcome the initiative, taken by the Mahindras, Tatas, Cummins India and state-owned Bhel to absorb contract workers into the regular workforce. The difference in pay and perks between regular employees and contract hands has led to violent clashes and shutdowns in many factories, including Maruti's. Nearly 90% of India's workforce is unorganised and produces as much as 50% of its GDP. These workers enjoy none of the health, insurance and other benefits that organised employees do, nor are they paid for taking time off. Work conditions in certain manufacturing and construction sectors are hazardous, with no mitigation for workers. Regularising contract workers will go a long way to boost the welfare of workers and improve industrial relations that remain fraught.Ironically, the biggest reason for this casualisation of labour are India's paternalistic laws governing employment. Once intended to protect workers from predatory employers, these laws have become an impediment in a modern economy, where skills and workplace behaviour need to be updated and modified constantly. The Industrial Disputes Act, for example, says that any company with more than 100 employees will need government permission to fire any worker. In practice, such clearances are never given. To get around these rules, industry has resorted to hiring contract workers, with no strings attached.Now that industry is taking a healthy initiative, the government should step up to do its bit. It should streamline India's labour laws and bring them up to date with the needs of the 21st century. The laws should protect workers' interests and give employers the flexibility to adjust the workforce to market requirements.
We welcome the initiative, taken by the Mahindras, Tatas, Cummins India and state-owned Bhel to absorb contract workers into the regular workforce. The difference in pay and perks between regular employees and contract hands has led to violent clashes and shutdowns in many factories, including Maruti's. Nearly 90% of India's workforce is unorganised and produces as much as 50% of its GDP. These workers enjoy none of the health, insurance and other benefits that organised employees do, nor are they paid for taking time off. Work conditions in certain manufacturing and construction sectors are hazardous, with no mitigation for workers. Regularising contract workers will go a long way to boost the welfare of workers and improve industrial relations that remain fraught.Ironically, the biggest reason for this casualisation of labour are India's paternalistic laws governing employment. Once intended to protect workers from predatory employers, these laws have become an impediment in a modern economy, where skills and workplace behaviour need to be updated and modified constantly. The Industrial Disputes Act, for example, says that any company with more than 100 employees will need government permission to fire any worker. In practice, such clearances are never given. To get around these rules, industry has resorted to hiring contract workers, with no strings attached.Now that industry is taking a healthy initiative, the government should step up to do its bit. It should streamline India's labour laws and bring them up to date with the needs of the 21st century. The laws should protect workers' interests and give employers the flexibility to adjust the workforce to market requirements.
Mark Exhaust acquires 2 companies worth $3 million NEW DELHI: Two years back, when the spectre of a slowdown loomed large on the domestic automotive industry, the Gurgaon-based sheet metal component maker Mark Exhaust Systems Limited (MESL), changed tack by focusing more on acquisitions and diversification while holding back on greenfield expansion.

The company, a joint venture between Rattan Kapur & Associates and Maruti Suzuki India made two acquisitions in the past few months and looks at taking its Group turnover (Rattan Kapur & Associates) from Rs 1,400 crore in FY14 to Rs 2,000 crore by next fiscal year. The company, a couple of weeks ago, acquired 100% stake in Haryana-based BWI Shock Absorbers for $ 1.5 million.
The Chinese firm BWI Shock Absorbers had recently bought the company from leading German component maker Delphi and now the company has changed hands in favour of MESL. Maruti Suzuki is a major client. The acquired company reported a turnover of Rs 140 crore in FY14.
“EBIDTA margins have been lower than expected due to the slowing demand in the market. The margins were in the range of around 14-15%. We have held back on fresh investment through the organic route and chose to look at acquisitions,” Rattan Kapur, Chairman and Managing Director, MESL told ETAuto in an interview recently.

MESL is one of the few companies that started as a joint venture with country’s largest carmaker Maruti Suzuki. “We make acquisitions that are backed by R&D,” he said.

Though the company focuses on exports, Kapur says this will change as he plans to cater to Indian OEMs and would also diversify to service two-wheeler makers. BWI has a R&D base in Poland and a MESL team is currently camped in East European nation.

“The acquisition will help the company establish its own R&D, training and validation centre in India in the next two years. BWI had a turnover of around Rs 140 crore in FY14, but it still has about 40% spare capacity which leaves room for further expansion,” said Rattan. BWI was originally, Delphi Company but was taken over by the Chinese company BWI Shock Absorber.

About six months ago, the company had diversified into pumps by acquiring a North Wales company Quinton Hazell (now Mark Water Pumps Limited) for $1.64 million dollars. The company has Volvo, Aston Martin & JLR as their major customers.

The company has recently concluded its organic expansion. It recently set up a new plant in Bangalore to build suspension system for Honda Motorcycles with an investment of Rs 120 crore.

MESL with its subsidiary Track Component, in Pune has partnered Mahindra & Mahindra for making under body systems and also CCBs –cross car beams for all the new models that Mahindra & Mahindra is going to launch. The company has invested Rs 70 crores in this plant.
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