CHICAGO (Reuters) - Ingersoll-Rand Co Ltd's (IR.N: Quote, Profile, Research, Stock Buzz) pending $9.5 billion acquisition of Trane Inc TT.N will help the diversified manufacturer expand in emerging markets like India, where the build-up of "cold-chain" infrastructure is key to future growth, Ingersoll's chief executive said on Monday.
"Trane really enhances our opportunity to participate in the developing world," Herb Henkel told the Reuters Manufacturing Summit.
Ingersoll, which said in December it would buy heating and air conditioning equipment maker Trane to expand its climate technologies division, aims to take advantage of long-term demand in developing countries for air conditioning in homes, places of work, and in transportation.
In countries like India, where as much as half of some farm products is spoiled before the food even gets to markets, developing the "cold chain" that moves perishables is a near-term focus for the company, Henkel said. Technology to cool farm goods after harvest, then control their temperature during transport, could reduce spoilage to less than 5 percent.
That's a message Henkel is taking to state and national governments in India in coming weeks.
"We can be a catalyst to give (the government) reason and purpose to really accelerate this," Henkel said. "With Trane helping us on the stationary warehouse side, we'll be able to fill in the gaps to make that chain effective."
Barriers to growth in India include high tariffs that make it prohibitively expensive to import machinery made in other countries, Henkel said.
"We need to be able to either get it in the country, because there's enough demand to justify the investment, or hopefully convince the government to lay off those tariffs," Henkel told the Summit. Ingersoll is looking at joint venture partnerships to accelerate its Indian growth, he added.
Trane will expand the climate technologies division to about $11 billion in annual sales, from about $3.5 billion in 2007, and will account for some two-thirds of total company sales. Ingersoll has said it will save at least $300 million a year by 2010 from the combination, and there is "absolutely" an upside to that savings total, Henkel said. Continued...
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