Auto components maker Rico Auto Industries has announced the sale of its 50 per cent stake in FCC Rico Ltd to its Japanese partner, FCC Co Ltd, for ₹495 crore.

In a deal that is being seen as aiding the momentum to business contracts between India and Japan, post Prime Minister Narendra Modi’s visit to Japan, industry sources said the Indian company, Rico Auto, has got a ₹1,000 crore valuation, which is rather significant in the auto component industry.

On its part, sources indicated that FCC Co Ltd was eager to take full control over operations, rather than have an international control over the joint venture. Incidentally, Japanese companies have been slow to respond to mergers and acquisitions in the past one year, and especially since some deals have gone bad. Sources added that FCC Co Ltd is relatively high up in the chain in Japan, and that the deal would tie in nicely for the Japanese firm, especially since some of the big auto component makers from Japan are already present in India. Yazaki, a big Japanese auto component player, is present in Chennai.

In a statement to the BSE, Rico Auto said its Board of Directors has approved the divestment in the joint venture. The 50:50 joint venture FCC Rico was manufacturing and supplying automobile clutch assemblies.

Legal firm Khaitan & Co advised FCC Japan on the transaction.

Zakir Merchant, Partner, Khaitan & Co told Business Line: “Post Modi’s visit to Japan, the momentum has clearly increased a lot. This big ticket deal is among the first significant deals out of Japan, and would help bolster trade.”

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