Bharat Forge Nets Rs 58 Cr From Lemmerz Stake Sale

Bharat Forge has made a neat profit of Rs 58.4 crore through the sale of its 60 per cent equity holding in Kalyani Lemmerz International Inc (KLI), US.

Bharat Forge had picked up 75 per cent equity in the joint venture between Hayes Lemmerz International and Bharat Forge, at Rs 9.6 crore. With Hayes Lemmerz International, the world's leading supplier of wheels and brake components to the transportation industry, insisting on a majority stake, Bharat Forge decided to give in fearing that the US firm may walk out of the venture and set up a new plant to compete with it.

 

In the present depressed automotive components market, Bharat Forge felt it prudent to sell off its major stake to the US firm and rake in a substantial profit from the mutually agreed deal. Bharat Forge will continue to hold the balance 15 per cent equity in Kalyani Lemmerz, while the balance 85 per cent will be held by the US firm.

Kalyani Lemmerz's plant is located in Chakan near Pune. It has an annual installed capacity of 4.5 lakh steel-wheels for heavy vehicles and other vehicles. It is increasing this capacity to one million steel-wheels per annum.

Meanwhile, Bharat Forge has decided to defer its decision to invest Rs 100 crore in expansion of its forging facility at Mundhwa here, following the depresssed domestic market conditions for commercial vehicles.

However, capacity at the Chakan plant of the company, which undertakes crankshaft machining, has been expanded to 3.6 lakh units per annum, making it among the largest crankshaft manufacturers in the world.

The existing capacities of the company can manufacture forgings valued up to Rs 1,000 crore per annum, while in fiscal 1997-98, its sales were Rs 605.2 crore. A major thrust is being given towards exports. Bharat Forge has a 50 per cent market share in the United States for axles.

Its international clientele includes Meritor Automotive and Dana Corporation of the US, Mercedez-Benz in Germany, and Mitsubishi and Isuzu in Japan.

In India, the company has already supplied axle samples to Toyota's car project in Karnataka in 1997-98, 16 per cent of the company's turnover came from exports. This is expected to grow to 25 per cent by the year 2000.

In spite of lower sales in the first quarter ended June 1998, Baba Kalyani, chairman and managing director of Bharat Forge, said he washopeful of improving the previous year's performance by focussing on new markets.