China performs for Renold while India beckons

Announcing its results for the 12 months to 31 March, the leading international supplier of industrial chains and related power transmission products, said it was a year which included the acquisition of Renold Hangzhou in China, the subsequent doubling of production capacity at this plant, and the announcement of its planned acquisition of LGB Industrial Chain in India. Chief Executive Bob Davies (pictured) reported that Renold’s June 2007 acquisition of a 90% interest in Hangzhou Shanshui, a chain manufacturer based in Hangzhou, China, 200 kilometres west of Shanghai had proceeded well with capacity more than doubled from pre-acquisition levels. Renold Hangzhou now had over 400 employees who were skilled and capable of maintaining high quality standards. The increase in capacity was the result of both improved operating practices and £2 million of capital expenditure - a large part of which was sourced locally and represented excellent value for money compared to what it would cost if sourced in Europe or in the US, explained Davies. The acquisition provided a major growth opportunity in the domestic Chinese market and into other parts of South East Asia. Although input costs in China, particularly steel, had increased rapidly and significantly Renold said it was actively pursuing price increases and cost reductions in order to offset the increases. Renold also confirmed it was in discussions to acquire a 75% interest in the industrial chain business of the Indian quoted group, L. G. Balakrishnan & Bros Ltd). LGB has three divisions, one of which is a chain division. Renold is seeking to acquire all assets of LGB's chain division other than those employed in the manufacture of chains to the automotive industry, which will be retained by LGB. The part Renold is seeking to acquire is based in Tamil Nadu, India and employs around 500 people involved in the manufacture of transmission and conveyor chain. The company regards the acquisition as an entry into the Indian market, which it said is one of the fastest growing in the world. The business, already the market leader for the production and distribution of industrial chains in India, will provide an established manufacturing base and sales distribution network. In the year under review, Renold increased turnover to £172.6 million from £159.3 million in the previous tear while pre-tax profit rose to £9.3 million (£1.4m).