MDT buys B'luru firm in turbomachinery push

German giant sees India as a manufacturing hub

MDT buys B'luru firm in turbomachinery push
MAN Diesel and Turbo (MDT), the €3.273-billion division of Germany’s MAN Group, has acquired all the shares of Bengaluru-based steam turbine maker MaxWatt for an undisclosed sum.

The acquisition follows MDT’s big bet on India’s manufacturing potential and the planned large push in the turbomachinery space here.

The new entity — MAN Turbomachinery India — will take MDT’s total headcount in India to 650, from the current 500. The Augsburg, Germany-based MDT is the world market leader in two-stroke diesel engines, and powers one in every two ships sailing in the high seas. In addition, MDT makes stationary gas and diesel engines for power plants, besides turbomachinery.

MDT has a number of turbomachinery installations in India and runs a service shop in Vadodara, in addition to an engineering and production centre for large diesel engines in Aurangabad, and several sales hubs. Turbomachinery may be defined as machines that transfer energy between a fluid and a rotating component such as a compressor wheel (like a turbine).

Turbo strategy
“The idea for the acquisition is to grow both companies together. For a long time, we were on the lookout to build our base in India in turbomachinery, and found MaxWatt, which will provide us some local perspective,” MDT Chief Executive Officer Uwe Lauber told Deccan Herald.

“Our philosophy is to grow business in an intelligent way, with the right fit of product range and market penetration, and localisation is the key,” he said.

In terms of product range, MaxWatt is involved in 20 mW impulse steam turbines (for power plants and drives), with special focus on manufacturing 10 mW turbines. Meanwhile, MDT is a big name in the production of large 50 mW reaction-type turbines, which are efficient, but expensive.

MDT will use MaxWatt’s two units at Jigani, near Bengaluru, to manufacture its reaction-type turbines for local needs, which will considerably cut down the cost of manufacturing, and also help MDT enter regional markets.

“The market for our turbines was mainly Europe, but with the current development, we see India growing as a large turbomachinery (turbine) manufacturing hub, from where we will tap Asian markets. The reaction-type turbines from the new entity will be exported to Indonesia, Malaysia, and Thailand over the next couple of years,” Lauber said. He added that turbomachinery makes up a third of MDT’s business.

MDT is also bullish on taking MaxWatt’s impulse turbines to its European markets. MaxWatt Managing Director C G Venkatesh, who will continue to lead the operations at MAN Turbomachinery India, said: “MaxWatt customers all over the world will profit from an extended product range and a worldwide sales and service network.”

MDT expects a steady 10-20 per cent CAGR onward to 2020, while, MaxWatt’s turnover grew from Rs 1 crore in 2003 to Rs 105 crore in 2014.

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