Mumbai-based Setco Automotive Ltd said on Tuesday said it will buy Spanish partner Lingotes Especiales SA’s stake in their joint venture Lava Cast Pvt. Ltd.
Setco, which manufactures construction and automobile equipment, said in a filing with stock exchanges it will merge Lava Cast with itself following the buyout. The Indian company is paying 950,000 euros (Rs 7.4 crore) to buy the stake.
The company said the merger will help grow business opportunities and enable the purchase of supplies through one vendor. Chief managing director Harish Sheth said the move will also improve Setco’s financial strength. “This merger will help in achieving our target of reaching Rs 1,000 crore revenue by financial year 2021,” he said.
The company sees a huge opportunity in the casting business, and has also entered the farm sector through supplying clutches, Sheth added.
Setco and Lingotes Especiales had set up the joint venture in 2014, with the two investing Rs 155 crore ($26 million then). The firms hadn’t disclosed the size of the stake they owned in the JV. Lingotes also came in as a technology partner for Lava Cast.
The two companies had said that Lava Cast would develop and manufacture fully machined ferrous casting products for the automotive and other industries. The entity currently operates an automated and fully-machined ferrous iron foundry with an installed capacity of 30,000 metric tonnes a year, of which 65% is expected to be consumed for in-house production by financial year 2020, according to Setco.
Incorporated in May 1982, Setco manufactures clutches under the brand name Lipe for commercial vehicles in India. The company, which employs over 2,000 people globally, counts Tata Motors, Bharat Benz and Ashok Leyland among its clients. Apart from India, Setco also has factories in the United Kingdom and the United States.
*This article has been updated to add the deal value.