Indian tyremaker Ruia Group is in talks with an automotive component company in Germany and will route the transaction through the listed group firm Falcon Tyres, a local report said.
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Pawan Kumar Ruia was quoted on website living.one india as saying his company was pursuing acquisition plans aggressively and was close to the deal but is yet to finalise the terms of the transaction. The name of the automotive component company is unknown.
Falcon Tyres, one of Ruia group companies, will raise about INR8bn by way of fresh shares through a rights issue, equity convertible warrant or other instruments which will eventually fund the expansion programme through capacity expansion in India and overseas acquisition.
Ruia Group lost out to Mahindra, as the latter was chosen to be the preferred bidder for ailing Korean SUV maker Ssangyong. Ruia now plans to invest in its Mysore plant in order to raise the capacity by 50% to 1.5m tyres per month. Ruia is also planning to invest money in a new factory in Haridwar with a capacity of 500,000 tyres per month.
Ruia said the greenfield facility would primarily cater to motorcycle maker Hero Honda while the new capacities at Mysore would primarily target the fast growing bike and scooter segment. The new investment will aid Falcon Tyres to increase its capacity by two-folds to over 2m units by September 2011.
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By GlobalData
