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Worbus facilitates the JV between Dongan Electric Co (US) & Sagaon Energy Equipment Ltd. (India)

Sagaon Energy Equipment Pvt Ltd, an energy equipment manufacturer based in Pune, has taken the joint venture route to penetrate deeply into Indian market and explore greater global footprint than at present. Sagaon has formed a 50:50 joint venture with US based transformer manufacturer Dongan Electric Manufacturing Company.

Pune, Maharashtra, October 22, 2010 /India PRwire/ -- Sagaon Energy Equipment Pvt Ltd, an energy equipment manufacturer based in Pune, has taken the joint venture route to penetrate deeply into Indian market and explore greater global footprint than at present. Sagaon has formed a 50:50 joint venture with US based transformer manufacturer Dongan Electric Manufacturing Company.

WORBUS a global M&A firm was engaged to bring in active JV partnership to enable companies to use their technology and low cost manufacturing capabilities to tap into the fast growing market. George Molakal stated that companies who take leadership in this direction are securing their future growth opportunities and realizing all stake holder values.

Sagaon was set up in 1975 and currently makes transformers and chokes, with existing customers like Siemens, ABB and Indian Railways.

The company has been committed to deliver quality products as per the local and international standard specifications to its valued customers. The company is a renowned vendor of a wide range of transformers to a large number of end users in India, U.A.E, West Africa, England, Korea, Sri Lanka, France and England. Sagaon has developed impedance bond for railways and become a major supplier of the impedance bond to India Railways and the countries like U.K., France, South Korea & Canada Dongan Electric Manufacturing Co., founded in the year 1909, has taken great pride in manufacturing variety of high-quality transformers to meet the demands of its most exacting customers. Dongan is a major supplier of dry-type, industrial control, residential & industrial ignition, motor drive isolation, and CE marked transformers throughout North America

The key factor for the success of Dongan is its high end technology, strong US brand name along with high level of Integrity, employee involvement, personnel strength with highly qualified engineers and technicians, and a service-oriented philosophy which keeps Dongan as a leader in transformer industry.

The company is keen to explore other verticals and new markets to sell its product. Dongan supplies to 300 customers spread across sectors like Electric, Electronic, and Automation & Robotics etc. primarily in US and Europe and also in Asia. As per Steve Polonis, Director of International Sales, Dongan Electric says, "The products manufactured in Pune facility would have a lower cost as compared to US, and therefore would give us a cost advantage in markets like US and Europe over our competitors. Along with, catering to existing markets we would also look at expanding in Asia and other Emerging Economies."

The JV Company - ANS Transformers and Reactors Pvt. Ltd.

The newly formed JV will be using current facilities of SAGAON for producing transformers worth Rs. 20 crore annually, at Bhosari in Pune. The products from the new facility will be initially sold to Indian customers as well as US Customers, while also looking to tap new customers in Europe and Middle-east.

"Our target is to produce Rs. 75 crore worth of goods annually in four years" said SAGAON Director- Neeraj Hardikar. Dongan Sagaon JV will lead to a unique value proposition to clients globally by providing low cost, high technology products to the developed markets such as North America and Europe. The sales will grow rapidly to achieve set targets with a profitability of 10%. The JV will grow rapidly in India where there is a high growth demand for the 'dry type transformers'.

The recent surge in demand for transformers in India is mostly propelled by increased investments in power generation and transmission during 11th five year plan (2007-2012). Due to rapid economic development and Government support, the power demand in India by 2012 is expected to be so phenomenal that the Indian power sector will need to replicate what has been achieved during the last 50 years in the next 10 years.

The Government continues its investments in accelerated development programme of power generation, transmission and distribution capacities aggressively which is going to benefit the electrical equipment manufacturers. In addition to central and state utilities, private sector participation is also expected to have a profound influence on the development of transformer industry. Moreover, ageing equipment is creating potential for a booming replacement market for transformers.

The JV envisages working on a low cost model from the outset by leasing one of Sagaon's existing facilities in Bhosari, Pune. Global M&A firm and Investment banker and Global Growth Advisors, ALCOR has structured the deal to suit the needs to both the partners in the present global economic situation, where cost saving has become the industry keyword as the industrial sales has taken a hit especially in developed markets like US and Europe.

The key business and sales strategies to be adopted by the Joint Venture Company are:

 Focus on maximum sales to State Electricity Boards and other Industrial applications as well as Steel and Cement Plants, Oil Refineries and Petroleum Plants, Chemical, Plastic and Rubber

Industries

 Enable Dongan US to expand local business due to low cost advantage through products

produced in India

 Expand market share in Europe taking advantage of low cost manufacturing

 Achieve high productivity and manufacturing capability through efficient material handling and other Quality techniques

 Tap the potential "Dry Type Transformer" market in India. The JV Company envisages setting up a marketing team in India which will be monitored and coordinated by Dongan in United States. The reporting will be online through CRM software.

The Joint Venture marketing strategy will emphasize the strengths of both the companies and the

products. The JVC will position itself as an aggressive, innovative company that supplies the market with high technology and high value products. The JV hopes to create a low cost manufacturing center for Dongan, whereas providing high technology to Sagaon to cater to the fast growing Indian market.

Steve Hicks the Global President of Dongan Electric and Chairman of the ANS JV company quoted "We are looking forward to our new relationship and have planned for profitable growth in the new Joint Venture. We are excited of the potential for expansion in the Indian and Asian markets. We welcome our Indian partners to this enterprise."

Neeraj Hardikar the Managing Director of the Joint Venture ANS JV company quoted "The New JV combines the strong brand and ethical values of both companies and would deliver quality product to markets in Asia, Europe, India and US. We wish to serve global customers with high technology and low cost manufacturing. We welcome Dongan to this Joint Venture"

George Molakal , the CEO of ALCOR was focusing said that "Indian companies who secure advanced technologies will be the ones who will grow rapidly over the next five years, since they will cater to global markets apart from the rising Indian demand. ALCOR is helping a range of companies in India, Europe, and US to focus on democratic India and build up a global solution base. ALCOR is working to bring in about 8 more projects this financial year with investment of $500 million".


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