The Hindu Business Line : Autoline seeks FIPB nod for taking 51% stake in US co

New Delhi, Oct.8 Pune-based auto component maker Autoline Industries Ltd has sought the Foreign Investment Promotion Board (FIPB) approval for acquisition of 51 per cent stake in US-based Detroit Engineered Products Inc, for a total consideration of Rs 30.6 crore through cash and stock swap.

The company proposes to acquire 30,600 shares of Detroit Engineered Products (DEP) for a total consideration of $7.65 million (Rs 30.6 crore) payable in cash and securities. This would be paid by cash remittances of $2.40 million; and through issue of 5.38 lakh equity shares of Autoline at an issue price of Rs 400 per share, including a share premium of Rs 390 per share (equivalent to $5.25 million), to the shareholders of DEP. DEP’s shareholders include seven NRI/PIOs, and one foreign national.

The company, in its application to the FIPB has stated that the foreign investors to whom the shares of the company are to be issued do not have previous or existing joint venture or technology transfer agreement in the same field. Further, Autoline has said that the issue of shares by the company to NRI/PIOs and foreign nationals is within the sectoral policy under the FDI guidelines. The issue of shares of the company attracts provision of Foreign Exchange Management Regulation.

Under the current shareholding pattern of Autoline, foreign companies hold 19.48 per cent stake, FIIs 9.41 per cent stake, NRI/PIOs (repatriation basis) 0.03 per cent stake, and NRIs/PIOs (non-repatriation basis) 0.54 per cent stake, while the resident holding is 70.54 per cent. Post the deal, the foreign nationals would hold 0.10 per cent stake, foreign companies 18.52 per cent stake, FIIs 8.94 per cent stake, NRIs/PIOs on repatriation basis 4.87 per cent stake and NRIs/PIOs non-repatriation basis 0.52 per cent stake, with the resident holding down to 67.05 per cent.

DEP is a Michigan-based engineering consulting and software products firm specialising in product development and solutions. All the products and services are aimed at reducing the overall product development cycle and get products faster to the market. The company focuses on areas like advanced engineering consulting, product development services including CAD and CAE, low-cost engineering services using global Innovation centre in India, design optimisation, custom engineering software development and advanced vehicle control system development.

Autoline, which is into manufacturing of sheet metal components, sub assemblies and assemblies, primarily supplies to OEMs like Bajaj, Tata Motors, Kinetic, and Mahindra amongst others. The company clocked net sales of Rs 65.9 crore in the latest quarter ended June 2007.