Kone Seeks Expansion Through Strategic Acquisitions of Service Companies

Amidst a changing global market landscape, Kone Corporation, a Finnish powerhouse in the elevator and escalator industry, has its eyes set on strategic growth through the acquisition of small services firms internationally. Kone’s top executive confirmed the company’s intention to actively explore and possibly partake in mergers and acquisitions, particularly in its traditional markets.

Kone Global President and CEO Philippe Delorme shared his insights with the press, indicating that the corporation is ready and well-positioned to undertake such acquisitions, although it has not earmarked a specific budget for this initiative. He spoke of these ambitions during a milestone event—Kone India’s 40th anniversary—a celebration ensconced with optimism for the future.

Reinforcing the significance of the Indian market, Delorme pointed out that it stands as the second largest for Kone, only trailing behind China in the pecking order. Given the burgeoning Indian real estate sector generating expansion in the market for new elevator installations, along with modernisation and servicing opportunities, Kone perceives the local landscape as a fertile ground for growth and investment.

In a notable move within this burgeoning environment, Kone India expanded its manufacturing capabilities to include escalators. They hit a significant milestone with the delivery of their first escalator consignment. Managing Director of Kone Elevators India, Amit Gossain, views this advancement optimistically, anticipating a surge in demand, propelled by substantial infrastructure progression by both governmental and private entities.

Statistics revealed by Gossain paint a picture of a thriving elevator and escalator industry in India during the calendar year 23, with sales reaching 75,000 units across both categories. Escalators comprise a modest but growing segment of 5-7% in this bouquet of vertical mobility solutions.

Demonstrating robust performance, Kone India outpaced the general market with a double-digit growth last year, a testament to its robust engagement with the residential sector, which accounted for a whopping 70% of its elevator sales. The remaining 30% was evenly distributed across commercial endeavours and infrastructure projects. Such figures underscore the pivotal role played by the company in India’s urban development and expansion.

However, amidst this expansion, Gossain emphasized the need for regulatory standardization. He advocated for the widespread adoption of a unified Lift Act, offering better safety regulations across states. At present, this legislative measure is in force in only 11 Indian states, including populous ones like Uttar Pradesh, Haryana, and Maharashtra. The call for uniformity reflects a commitment to safety and quality that aligns with Kone’s global standards.

The Finnish company’s strategy, rooted in selective acquisition, aims to reinforce its service offerings, diversify its portfolio, and consolidate its market position globally. Kone’s leadership, while maintaining a shrewd financial strategy with no fixed acquisition budget, underscores a flexible approach, enabling the company to respond opportunistically to conducive market conditions and potential partnership opportunities.

As Kone Corporation continues to ascend in the global market through both organic growth and strategic acquisitions, its approach to investment in the Indian market and across the globe heralds a promising trajectory for the enterprise, reflective of a deep understanding of market trends, customer needs, and the evolving landscape of urban infrastructure development.