In order to use ABB and Siemens in the medium voltage switchgear market, Larsen & Toubro (L & T) acquired the Malaysian company Tamco's switching business for approximately $ 110 million.

L&T currently has “zero per cent” market share in the medium voltage switchgear market. With this acquisition, it expects to garner a 10% share by 2009-10.
According to R N Mukhija, president, L&T, “The Tamco medium switchgear portfolio fits us to a tee.”

L&T has out a 40% market share in low voltage switchgears in the domestic market.
As big-ticket investments in power generation and transmission take place in the country, L&T’s acquisition is timely and provides it a quick entry into a new segment, an analyst said.

Typically, switchgears in substations are located on both the high-voltage and the low-voltage sides of large power transformers.

Switchgears control the flow of energy in electrical power systems such as generators, motors, transformers and substations, analysts said.

But what does this acquisition mean to L&T? Will it make a dent on Siemens and ABB?

“Tamco switchgears compare well with the ABB’s and Siemens’,” Mukhija said. “Today we have a 0% marketshare, but by 2010 we’ll garner 10% in the segment,” he added.

The acquisition, he said, would help double revenues at L&T’s electrical and electronics division to $1 billion by the year to March 2010.

For L&T, the low voltage switchgear business contributed $500 million to annual revenues whereas Tamco’s revenues last year were pegged at $102 million.

Tamco made an annual profit of $9 million last year. The Malaysian business was hived off from Tamco Corporate Holdings Bhd to ‘unlock shareholder value.’

Tamco switchgears are mainly sold in Malaysia, Australia, China and Indonesia.

Article from:

http://www.dnaindia.com/