The Hindu Business Line : TVS Motor to buy Bharat Tech frames division for Rs 33 cr

TVS Motor Company Ltd has decided to buy out the frames division of Bharat Technologies Auto Components Ltd, which is located at Hosur, Karnataka for Rs 33 crore.

Bharat Technologies is a 100 per cent supplier of all two-wheeler frames used by TVS Motor.

However, the latter itself would not carry out the acquisition.

Instead, it has proposed to use its wholly owned subsidiary, Sundaram Auto Components Ltd, for the purpose.

The acquisition has been identified as a major expansion programme of the company.

According to the directors' report of Sundaram Auto Components, the acquisition would be funded through loans from banks and TVS Motor like its other expansion programmes.

It may be mentioned that TVS Motor currently has about 180 suppliers, who are located all over the country.

The company has also decided to establish a new unit for the production of plastic components at Manapakkam in Chennai.

The cost of this expansion has been pegged at Rs 2.5 crore and it is aimed at meeting the demand of customers located in and around the city.

The report said that the new plant at Chennai would help the company reduce cost of logistics.

Moreover, it would enable it to cater to the export market and expand its customer base. "The additional capital expenditure to be incurred for the expansion projects will be funded by bank term loan and unsecured loan from the holding company," it said.

These two projects would help the holding company, TVS Motor, to make the most out the current fiscal.

The two-wheeler industry is expected to register 12 per cent growth this fiscal.

For the year ended March 2005, Sundaram Auto Component had recorded gross sales of Rs 102.03 crore against Rs 76.06 crore the previous fiscal, marking a growth of 34 per cent.

This is the first time that the company has managed to cross the Rs 100-crore turnover mark. The company had also registered an export turnover of Rs 6.57 crore in the last fiscal.

Similarly, profit after tax increased to Rs 4.45 crore from Rs 3.60 crore during the period. The company had proposed a dividend of 36 per cent, which would lead to a total payout of Rs 97.20 lakh.

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