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Auto components maker Bharat Forge has exited an eight-year-old joint venture company in China by selling its stake in the JV partner. The firm, which had an annual turnover of approximately Rs 600 crore, made forgings, predominantly for the Chinese auto industry.
The Pune-based forgings major announced that Bharat Forge Hongkong Ltd, its indirect subsidiary in Hong Kong, has divested its 51.85 per cent stake in its Chinese JV operations FAW Bharat Forge (Changchun) Company Ltd.
The stake has been sold to its joint venture partner China FAW Corporation Ltd for $28.2 million (Rs 175 crore), bringing to an end its partnership in China. Since the JV’s inception in 2006, Bharat Forge has invested Rs 178 crore in four tranches. Though the sale transaction was completed today, the effective date for divestment is October 31, 2013. The divestment will have a positive impact on its cash flows and profitability on a consolidated basis, the company said.
Though it had entered into a JV in China, Bharat Forge also has small independent exports to the country which will not be impacted, it said.
On the BSE today, the company’s share touched a 52-week high of Rs 351.05 during intra-day trade before closing at Rs 345.65, higher by Rs 13.85 (4.17 per cent) over Friday’s closure.
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