Auto component manufacturer Rico Auto Industries Ltd has received its board's approval to transfer its investment in three units to another subsidiary Rico Investments Ltd which would then become a core investment company, as per a stock market disclosure.
The three companies include RAA Autocom Ltd, Rasa Autocom Ltd and Rico Jinfei Wheels Ltd which would become part of Rico Investments. Rico Investments in turn would then rope in a strategic partner which would initially hold up to 10 per cent stake in the firm, the company said without disclosing the name of the proposed partner or the deal value for the proposed transaction.
The equity shares of these three subsidiary companies are proposed to be sold for an aggregate cash of Rs 1.5 crore.
Meanwhile, Rico Auto's board has also approved sale and transfer of company's ferrous (Gurgaon & Manesar) and non-ferrous based auto component business division (Sanand, Gujarat) to its subsidiary RAA Autocom Ltd on slump sale basis for around Rs 39.59 crore ($6.4 million) and Rs 4.81 crore ($0.78 million) respectively. This would come under Rico Investments as per the proposed restructuring.
The deals are subject to shareholders' approval.
Arvind Kapur-led Rico Auto and its subsidiaries supply high-precision, fully machined aluminum and ferrous components and assemblies to automotive OEMs in India. The company caters to two-wheeler, passenger car and commercial vehicle segments, and also to system suppliers.
Recently, the company exited its joint venture FCC RICO Ltd by selling 50 per cent equity stake to the Japanese partner FCC Co Ltd for Rs 495 crore.
On Friday, shares of the company were trading at Rs 46.80 each, down 1.16 per cent on the BSE in weak Mumbai market at 12.28 PM.
(Edited by Joby Puthuparampil Johnson)