The promoters of Igarashi Motors, a Japanese family who hold 61 per cent in the Indian arm is set to exit the company at a discount to the market price. The deal is expected to be struck at Rs 61 a share as against the current market price of around Rs 70.
Market sources indicate that a South India based manufacturer of industrial products is expected to be the acquirer of this company which manufactures DC motors. The Japanese family owns a little over 60 per cent in the publicly held Indian arm and post the Open Offer, the total deal value is expected to be in the range of little over Rs 70 crore.
Market sources indicate that the deal is expected to be announced as early as next week. The company has a manufacturing base in Chennai and majorly relies on exports has been trying to raise resources for its expansion. The management of Igarashi Motors declined to comment on the development.
In FY 10, the company's net sales dropped sharply by 38 per cent to Rs 158.71 crore. It reported net profit of Rs 2.73 crore from net loss of Rs 60.29 crore in FY 09. The company is expected to clock in revenues in the range of Rs 180-200 crore for FY11. It expects to achieve EBIDTA margin of 16-17 per cent in FY 11 against 11 per cent in FY 10.
The company had earlier stated that it plans to raise Rs 50 crore to fund their growth and also to raise their stake in the joint venture with Bosch and to reduce the leverage. The company had indicated that it may look at an QIP or an preferential allotment but will not resort to secondary market. The company's current stake in Bosch JV is 12 per cent.
The company primarily caters to the export market (77 per cent of their revenue in FY 10) and has been hit by global recession. At the recently concluded AGM, the company’s management said that they expect countries to begin recovering from the global recession only from 2012-13 though not to the levels in 2007.
“The company is looking at catering to non auto industries and domestic market though it would take a while for it to shape up. Irrespective of global recession or venturing into the domestic market, the company plans to continue to meet 2/3rds of its business through exports,” the management had noted.
In quarter ended June 2010, the company's topline grew by 33 per cent to Rs 46.25 crore. It turned around with net profit of Rs 2.07 crore against net loss of Rs 2.54 crore in June 2009 quarter.