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Make in India: Everstone buys over 51% in SJS for Rs 350 crore

Economic Times:  October, 2015

Mumbai: Singapore-based private equity firm Everstone Capital has purchased a controlling stake of over 51 per cent in domestic auto components maker SJS Enterprises for an estimated Rs 350 crore, executives close to the development said. The money will be used to expand capacity.

The PE firm, launched by former Goldman investment bankers Samir Sain and Atul Kapur, acquired 26 per cent stake owned by American specialty printing company Serigraph and another 25 per cent stake from the three owners of the Bengaluru-based auto components maker.

The day-to-day operations will be managed by the three entrepreneurs - S Sivakumar, KA Joseph and V Srinivasan - who started the company in 1987. Joseph will continue as the managing director, senior officials said.

"We welcome Everstone's interest in financing our expansion plans," Joseph told ET. The investment includes secondary as well as primary purchase. Everstone will help the company set up its next plant near Bengaluru and finance its expansion plans.

SJS makes industrial graphics for refrigerators and washing machines, and auto component makers in India as well as overseas. It earns a sizeable chunk of its revenues from auto and appliances makers such as TVS Motor Company, Bajaj Auto, Maruti Suzuki, Tata Motors, LG, Samsung and Whirlpool.

As per the March 2015 rating release from ICRA, SJS Enterprises recorded a profit after tax of Rs 8.9 crore in 2013-14 on an operating income of Rs 92.7 crore, compared to profit of Rs 3.7 crore on an operating income of Rs 78.07 crore in 2012-13. During the nine months to December 2014, the company reported a profit before tax of Rs 27.5 crore on an operating income of Rs 110.2 crore.

The auto industry contributed about 75 per cent to the company's revenue in 2013-14 while exports accounted for about 14 per cent. In the first nine months of 2014-15, the company saw its operating profitability increase to 29.4 per cent from 13.5 per cent in the previous fiscal.

"SJS is a leader in its space and has a track record of excellence in manufacturing and customer service," said Sameer Sain, cofounder and managing partner at Everstone Capital. "We believe a company such as SJS exemplifies the 'Make in India' philosophy and we will continue to focus investments in such sectors."

Everstone is an India and Southeast Asia focused private equity and real estate investment firm with assets under management of $3.3 billion.

Everstone, which has been aggressive in the consumption business, had raised $580 million under Everstone Capital Partners II and $425 million Indivision India Partners. In September it closed its third fund of $730 million from global investors.

"The automobile sector is expected to benefit from the expected lower interest rate regime. However, PE investors have been cautious in the sector and are expected to continue to be so. At the same time, SJS falls more in the consumer/auto derivative space which may be more attractive," said Sanjeev Krishan, executive director and head of private equity transactions advisory services at PricewaterhouseCoopers India.

Early this month HUL sold its bread and bakery business, Modern foods to Nimman Foods, a company backed by Everstone Group. Its other recent investments include Ritu Kumar, VLCC Healthcare, Tikona Digital Networks, Burger Kind India, Pan India Solutions, Capital Foods and Sula Vineyards.

Auto components industry in India is growing fast. As per a recent report by India Brand Equity Foundation, the sector is expected to grow to $115 billion by 2021 from $66 billion at present.