Franklin Electric Co. announced Monday it has acquired majority stakes in two companies in India.
Terms of the deals won't be disclosed until the firm's third-quarter report comes out in October.
The acquired companies are Pluga Pumps and Motors Private Ltd. and Wadcorpp India Private Ltd. Pluga recorded $13 million in revenue in the fiscal year that ended in March, while Wadcorpp had $1 million.
Fort Wayne-based Franklin says the move will help it get a bigger footprint in a part of the world where infrastructure demand is growing.
Franklin bought a 70 percent share of Pluga with cash and must buy the remaining 30 percent in 2017. Franklin Fueling Systems bought a 65 percent share of Wadcorpp with cash and is obligated to buy the remaining 35 percent as early as 2017.
Pluga designs, manufactures and distributes groundwater motor and pumping equipment, while Wadcorpp is a distributor of fueling equipment.
Franklin assumed some debt in the deals, but officials would not discuss the amount until after the third-quarter report.
John J. Haines, vice president and chief financial officer for Franklin Electric, said the company is eager to integrate the businesses.
“Obviously, we're excited,” he said, although he added that no immediate job growth will result from the transactions. “India is a very large country with an emerging middle class.”
Haines said Franklin would provide equipment and related components for gasoline stations, as more residents of India are driving vehicles.
“It's better to have a company presence and not just import our products into the country,” Haines said.
Franklin Electric designs and makes submersible motors and pumping systems to move water and fuel. Customers include homeowners, cities and companies in commercial, agricultural and other industries worldwide.
Local financial analyst Terry Anderson would not speak directly about Franklin Electric but said any company investing in India has to take some bad with the good.
India didn't fare well in Transparency International's 2013 Corruption Perceptions Index. The ranking scores countries on a scale from zero to 100. The higher the score, the more trustworthy the country.
India's scores ranged from 30 to 39. “It's a very high-risk market,” said Anderson, a partner with Reimbold & Anderson in Fort Wayne. “I'm sure they did their homework and know what they're doing.”
Gregg Sengstack, chief executive officer of Franklin, remains confident.
“Both of these transactions will provide Franklin with an in-country presence off which we can grow by introducing other Franklin products and building out new distribution capabilities in both the water and fueling markets these companies serve,” he said.