Bombay Burmah to sell springs division to NHK Spring of Japan
07 September 2011
Bombay Burmah Trading Corp is selling its springs division to a unit of Japan's NHK Spring Co for Rs181 crore on a slump sale basis.
The board of directors of the company at its meeting today approved the sale, according to a filing with the Bombay Stock exchange (BSE). Shares of the company rose more than 10 per cent on the news.
The company said, the decision to sell the spring division, which manufactures and markets springs for automobile application, was in line with the firm's policy to restructure its business portfolio to focus on core activities.
Bombay Burmah is a Wadia Group company, which has interests across textiles, chemicals, laminates and real estate.
The company currently sells 1,400 types of springs to clients like Maruti Udyog (Zen, Wagon R, Swift, Esteem and Alto), Suzuki Powertrain (new model diesel engines), Tata Motors (Indigo, Indica, Marina) and Hindustan Motors (Isuzu), among others.
The total market for auto components in India is around RsRs990,000 crore and components aftermarket constitutes around 25 per cent of the total market, valued at Rs24,750 crore, according to data available with Automobile Components Manufacturers Association (ACMA).
According to analysts, the growth drivers for the industry are also in place - namely, increasing demand for vehicles with vehicle production rising to around 17.9 million in 2010-11, increased presence of global original equipment manufacturers (OEMs), low-cost operations and high quality standards, as also availability of low-cost, skilled manpower and policy initiatives, among others.
Yokohama-based NHK Spring Co has interests across automotive suspension springs, automotive seats, precision springs and components, machinery and equipment among others.