Kyocera India Buys Kilburn's Copier Biz In All Cash Deal
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The transaction, which is expected to be completed by August 31, will help Kyocera enhance its national presence by taking over Kilburn's 100 dealers and 15 offices across the country. Kyocera India currently has 4 offices in India.
Kilburn, which markets and services photocopier, multi-functional products and printers in India, has been a distributor for Kyocera for the last 18-19 years. Given the strong competition from established players in this domain; Kilburn's copier business had failed to show a healthy growth. So the company decided to sell it off so as to focus on its other businesses.
"This (copier) is an area where Kyocera's growth plans and our growth plans did not really match because we are competing against all multinationals whether Ricoh, Canon or Xerox," said S. K. Jalan of KOAL. "Copier is a product where you don't make money on the hardware but on the repeat sales. There is a lag in terms of returns so if you have to meet the expectation there is a lot of investment required and we are a relatively small company," Jalan added.
According to KOAL, it was unable to meet Kyocera's growth plans in India. Kilburn posted revenue of about Rs 60 crore last financial of which 55 per cent came from its copier segment. However, the margins were pretty low in the segment and the competition was fierce, according to the company.
Kilburn now plans to focus on its banking and mailing segment where it has reasonably higher market share. Also as the migration from traditional old machines to digital machines takes place in the mailing business, Kilburn sees good opportunity for itself in the space.
Kilburn which went through a rough patch in last 8-10 years has about Rs 16 crore of debt in its books and plans to repay a part of it from the money it receives from this sale.
Kyocera expects the acquisition to help achieve its aim of reaching the top in India's printers and multifunctional printers industry.
Kyocera plans to triple its current sales by 2014 (FY 2013) in China, India, Korea and ASEAN countries, said M Higuchi, President, Kyocera Mita Asia.
Kyocera Mita India too plans to enhance its revenue by 5 times by 2016. The company currently has Rs 70 crore of revenue.