Rico to buy out Magna from JV, Auto News, ET Auto

Rico to buy out Magna from JV, Auto News, ET Auto
CHENNAI: Auto component major Rico announced in a stock market filing on Thursday that it will buy out its Italian partner Magna from its joint venture Magna Rico.

Company CMD Arvind Kapur said in the stock market statement that the JV, which makes oil pumps and water pumps, will pick up the total stake of Magna following the Italian auto component major globally selling out to Korean company Hanon. Post the share buy out, Rico Magna will be Rico Power and Hydraulics.

Kapur said, “Globally, they have sold Magna to one Korean company, which is Hanon, the pump division and Rico Magna was the only joint venture they had in the world. We had the option of buying the stakeout of selling to them and the price they have offered us, we found it attractive.

So the Board decided that we should pick up the total stake of Magna Rico and so after the deal is signed and Rico and its subsidiaries would be 100% owners of Magna Rico, which would then become Rico Power and Hydraulics Limited after obtaining the necessary approval,” he added.

The total turnover of Magna Rico is about Rs 90 crore in FY2018 and the profit was Rs 6 crore last year and this year for nine months the turnover has been Rs 67 crore and the profit so far is Rs 4.3 crore, Kapur added.

He also said that Rico’s capex for the year has been revised given the slowdown in the market. “This year the total capex that we had envisaged and what the Board had cleared was Rs 200 crore but looking at the slow down we have postponed a lot the capex and I think we will be close to Rs 145 crore- Rs 150 crore total.”

Rico’s focus, he said, is on high-pressure diecast machine of high tonnage size “because not too many people are in it and the value additions and the margins are definitely better on the high tonnage machines,” added Kapur. During the board meeting, it was also decided to give interim dividend of 40%. “We had given 40% dividend even last year as interim,” he said.

This year the total capex that we envisaged and what the Board cleared was Rs 200 crore, but looking at the show down we have postponed a lot the capex and I think we will be close to Rs145 crore to Rs 150 crore total capex that would spent and by the end of this Q4 and our focus is on high-pressure diecast machine of high tonnage size and this is primarily because not too many people are in it and the value additions and the margins are definitely better on the high tonnage machines.

During the board meeting, it was also decided that we give interim dividend of 40% and we had given 40% dividend even last year as interim and during the board meeting.

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