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M. Ramesh

Chennai , Oct. 15

THE Chennai-based Shriram group has sold its 44.8 per cent stake in Hi-Tech Arai Ltd to Arai Seisakusho of Japan, for Rs 18.81 crore.

Back in 1988, the group had invested Rs 2.5 crore in the company's Rs 5.6 crore equity — so the group makes a profit of Rs 16.31 crore on the deal.

Hi-Tech Arai is a joint venture of the Shriram group, Mitsubishi Corporation and another Japanese company called Arai Seisakusho. The two Japanese companies have 12 and 33 per cent stakes respectively. The Rs 75-crore Hi-Tech Arai manufactures oil seals at its plant in Madurai for the automotive industry. It is understood that Hi-Tech Arai is now on an expansion mode.

Shriram group's Chairman, Mr R. Thyagarajan, told Business Line today that the MoU with Arai was signed about 10 days ago. (Negotiations had been going on for more than a year.) The deal, of course, is subject to various statutory approvals.

He said that in the initial days the company tottered, but the Shriram group supported it with "understanding financing", giving it loans without asking for interest immediately. Hi-Tech Arai settled into profit making in 1994 and has been paying a dividend of 20 per cent ever since. "We have the satisfaction of having been instrumental in creating an excellent organisation," Mr Thyagarajan said.

He said that the funds generated of the stake-sale would be deployed in the group's core business of truck financing.

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