Financial Daily from THE HINDU group of publications
Wednesday, Nov 20, 2002
Mergers & Acquisitions
Bridgestone plans to make commodity grade tyres To buy out ACC, Tata Engg stakes
NEW DELHI, Nov.19
JAPANESE tyre manufacturer Bridgestone Corporation is planning to make commodity grade tyres in India as part of its global capacity expansion plan and geographical realignment of production capacities.
As a prelude to the move, the company has decided to buy out its Indian partners in the joint venture company, Bridgestone ACC India Ltd.
Bridgestone currently holds 64 per cent stake in the company.
The two Indian partners, namely Associated Cement Companies Ltd (ACC) and Tata Engineering and Locomotive Company Ltd (Tata Engg), holds 19.56 per cent and 6.44 per cent, respectively. The remaining 10 per cent is held by Mitsui & Co of Japan.
The company has applied to the Foreign Investment Promotion Board (FIPB) seeking approval to buy out its Indian partners in the joint venture company.
Following the buyout, the company's paid-up capital will remain unchanged at Rs 155.2 crore while Bridgestone's total investment in the Indian tyre manufacturing company will go up to Rs 139.68 crore from the present Rs 99.68 crore.
The company has informed FIPB that the Japanese parent is planning a major expansion in the near future for which there will be further equity infusion into the Indian company post-restructuring of its capital holdings.
The Japanese tyre manufacturer has earmarked a total investment of $250 million for the global expansion and geographical realignment exercise, of which $104 has been planned for Asian operations though the exact amount to be invested in the Indian operations is yet to be formalised, according to informed sources.
The move is aimed at coping with the shift towards larger sizes of passenger car tyres in industrialised nations and the growing demand for commodity grade tyres in the newly industrialising economies of Asia and elsewhere.
Simultaneously, the company plans to stop production of commodity grade tyres at some of its Japanese plants.
Bridgestone's Indian plant is located at Kheda in Madhya Pradesh and started operations in 1998.
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