Ingersoll sees Trane helping India expansion

CHICAGO (Reuters) - Ingersoll-Rand Co Ltd's (IR.N) 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.

Separately, Henkel said he still expects the Trane acquisition to close around May 31, though the closing may happen a month earlier or later. The company is funding the acquisition from cash it generated through recent divestitures, a new share offering, and about $4 billion in additional debt.

The current credit crunch is not an issue for Ingersoll, Henkel said.

"We have financing commitments (and) we do not anticipate any problems whatsoever on the financing side of this transaction," he said. The credit crunch is largely limited to the U.S. housing market, to which Ingersoll has reduced its exposure by selling its Bobcat machinery unit last year.

The company, which also has industrial and security technologies segments, will focus on integrating Trane for the next 18 months to two years, and any near-term acquisitions will likely be "bolt-on" deals of about $200 million in size.

Future deals would push Ingersoll into related product lines or allow it to expand in specific countries, Henkel said. Examples include buying technology to control air quality to reduce health risks from food, or to expand its industrial and security divisions in Latin America and in Scandinavian Europe.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Nick Zieminski, editing by Richard Chang)