Tenneco India explores diversifying beyond auto sector, eyes M&A

Tenneco Clean Air India is exploring opportunities for acquisitions as the auto component maker looks to broaden and diversify its business beyond the automotive sector.

Tenneco Clean Air India is exploring opportunities for acquisitions as the auto component maker looks to broaden and diversify its business beyond the automotive sector, according to a senior company official.

The company is considering options in industrial markets, including rail, aerospace and defence, while it is also looking to expand to automotive products that are powertrain-agnostic, which can be used in internal combustion engine, hybrid and electric vehicles.

"We are looking for related diversification. We are also looking for unrelated diversification. There are inorganic M&A opportunities that we are looking at. We are quite excited about it," Chief Executive Officer Arvind Chandra told PTI.

Tenneco is an automotive components company, with businesses in clean air and powertrain solutions and advanced ride technologies. Its products include exhaust after-treatment systems, bearings, spark plugs and suspension systems.

One of the major reasons Tenneco is considering diversifying into new sectors is that automotive markets have historically been cyclical in demand. An inorganic growth opportunity would allow the company to quickly enter a new, faster-growing area.

For acquisitions, Chandra said targets should have strong technology, decent margins and a distinct market position. A global business with plans for India would also be attractive, he said.

"It must have some sort of a strong differentiator. And of course, there should be an India story attached to it so that we can do something with the asset."

When asked which sectors look more promising for growth, he said: "I cannot comment more because we are exploring quite a few of them."

Citing Tenneco's cash generation and lack of debt, Chandra noted that the company has the capacity to do a sizeable acquisition. "We are generating a lot of cash from our balance sheet. We are a zero-debt company...We can do a good, decent, good-size acquisition with the cash we have. Meanwhile, Tenneco is looking to broaden its core automotive sector business with an expanded portfolio across vehicle powertrains.

"Our own internal strategy says that we want to grow. We want to be powertrain-agnostic, so whether it is ICE vehicles or electric or hybrid vehicles, we should have a product that fits into all three categories," he said.

Tenneco has a strong order book, which the management believes will help the company grow in double digits through 2030. Chandra said its order book had reached ₹16,500 crore, from about ₹12,000 crore in the previous quarter.