Kolkata-based businessman Pawan Kumar Ruia said he is in talks to acquire an automotive component company in Germany and may route the transaction through the listed group firm Falcon Tyres.
Falcon Tyres will raise around 800 crore by way of fresh shares through a rights issue, equity convertible warrant or other instruments that will fund its expansion programme through capacity expansion in India besides overseas acquisitions, he said.
“We are pursuing acquisition plans aggressively and are close to the deal, but are yet to finalise the terms of the transaction ,” Mr Ruia said without giving names of the target firms.
He said the acquisition is part of a strategy to consolidate operations in automotive space and look for new targets after unsuccessfully bidding for Korean SUV maker SsangYong. The Ruia Group, which has had made several acquisition in the past, lost out to local utility vehicle maker Mahindra & Mahindra.
Mr Ruia said the company is also looking to pump money into the Mysore plant to raise its capacity by 50% to 15 lakh tyres per month besides plans to invest in a new plant in Haridwar with a capacity of 5 lakh tyres/month. The greenfield facility would primarily cater to Hero Honda while the new capacities at Mysore would primarily target the fast growing bike and scooter segment.
The expansion will help Falcon Tyres double its capacity to over 20 lakh units million by September 2011.
The proposed rights issue expected to be floated before December this year, for which the company took a board nod early this year, will also allow the promoters to dilute their holding to confirm new public holding norms. The promoters holding in Falcon Tyres stood at 85% as of June 30, 2010 that will come down to 75% if they do not participate in the issue.
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