Setco buys Dana Corp clutch unit

Mumbai-based Gujarat Setco Clutch has acquired lipe clutch division of the US-based Dana Corporation for Rs 16 crore.

Setco Automotive (UK), a subsidiary of Gujarat Setco Clutch, acquired the division of the foreign company.

The lipe clutch division registered a revenue of about Rs 26 crore last year. It posted net profit of Rs 4.5 crore, said Harish Sheth, managing director, Gujarat Setco Clutch.

The lipe clutch division exports to America, Europe, Africa and Australia. The division has about 29 employees, which would be expanded soon to 40 by the new management.

"Gujarat Setco would prefer to grow on an inorganic basis. This way we would get readymade setup of clients and save a lot of our time and resources," said Sheth.

Dana, Ace and Heldex are the three major international clients of Gujarat Setco in the US. Gujarat Setco is a leading clutch maker for heavy commercial vehicles like trucks.

The company meets 80 per cent of the requirement of Tata Motors and 70 per cent of Ashok Leyland. For the 15 months ended June 2005, Gujarat Setco registered net profit of Rs 55 crore and net sales of Rs 113 crore.

Currently exports meet 7 per cent of the total turnover of the company.

Recently, New Vernon Pvt Equity Ltd acquired a stake of 14.17 per cent in the company. The promoters own 65 per cent of the company. The balance lies with the public and financial institutions. After undergoing a brief period of suspension, Gujarat Setco is planning to relist its shares at the Mumbai and Ahmedabad stock exchanges.

It also intends to change its name to Setco Automotive Ltd.

Gujarat Setco is planning to invest Rs 40 crore in its expansion activity at the company's Pune manufacturing facility. Right now the company is able to perform 30,000 clutch assemblies which would be expanded four times in another three years.