The world’s second-largest forgings company Bharat Forge Ltd, a part of diversified business conglomerate Kalyani group, has offloaded its entire 51.85 equity stake in FAW Bharat Forge (Changchun) Co Ltd to the Chinese joint venture partner for $28.20 million (Rs 175 crore), according to a stock market disclosure.
The company’s Hong Kong arm sold its stake to its local partner, China FAW Corporation Ltd, ending its eight-year-old joint venture in the country. Since the launch of the joint venture in 2006, Bharat Forge had invested Rs 178 crore in four tranches in the joint venture.
FAW Bharat Forge is engaged in the manufacturing of powertrain and chassis components for commercial vehicles, buses and light trucks and transmission parts for the Chinese passenger car industry.
Reacting to the news, share price of the Indian company rose over 9 per cent in mid-day trades on the Bombay Stock Exchange, in a strong Mumbai market on Monday.
The transaction closed on January 13, 2014, but will be effective from October 31, 2013, Bharat Forge said, adding that the stake sale will have a positive impact on the company’s cash flows and profitability on a consolidated basis.
During the second quarter ended September 30, 2013, Bharat Forge reported a 6.64 per cent decline in its net profit to Rs 96.38 crore against the year-ago period. Total revenues shrunk 2.6 per cent to Rs 845.1 crore in the same period.
Bharat Forge is second only to Germany’s Thyssenkrupp among the top global forgings players.
(Edited by Joby Puthuparampil Johnson)