Sundram Fasteners Ltd, the Chennai-based auto component major, announced its acquisition of the precision forgings business of the United Kingdom-based Dana Spicer Europe Ltd, for £1.5 million.
The precision forgings division has been hived off as a new company called Cramlington Precision Forge Ltd, based in UK and would be a fully owned subsidiary of SFL.
CPFL would be SFL's third manufacturing base outside India. The company, through its subsidiary TVS Autolec Ltd, already has a oil and water pump manufacturing base in Malaysia. SFL is also setting up a high tensile fasteners unit in Zhejiang province in China.
Addressing the media in Chennai, SFL's chairman and managing director Suresh Krishna said, "Apart from the logistic benefits of setting up global manufacturing units, the company would also be establishing foothold in the global auto component market by supplying to blue chip customers through such acquisitions."
The acquisition of the precision forging business of Dana Spicer has enabled the company to supply to global customers like MAN, DAF Trucks, Albion Automotive, Scania and Parker.
Krishna said CPFL is one of the three companies in the Europe that manufactures bevel gears for the automotive industry.
The other two companies, Meritor and Thyssen, manufacturing similar high precision forgings are based out of Germany.
SFL has initially invested £1.7 million into the new company, which includes the £1.5 million paid to Dana Spicer as consideration for the transaction.
Krishna said the acquired precision forging business is a profitable one and has achieved a turnover of £3 million during the 11 months ending November 30, 2003.
The present capacity utilisation is around 50 per cent of the total two million forgings capacity per annum. This business hopes to achieve £6 million turnover in the next two years by increasing the capacity utilisation, he said.
He also said that SFL would try to sell CPFL products to Indian automotive industry, if the cost after the 30 per cent customs duty makes it viable.
Similarly SFL would also try to sell it products manufactured in India to be sold to its new blue chip customers.
The product profile of CPFL, include differential gears, dog tooth gears, coupling flanges, crown wheels and other transmission equipment for both on-highway and off-highway applications.
The agreement with Dana Spicer includes a definitive three-year supply agreement of precision forgings from CPFL.
