German firm buys 50% in Purolator India

In a swap deal that would create the country's largest automotive filter system company, Germany's Mahle Filtersysteme has bought 50 per cent stake in Purolator India and has given 50 per cent stake in Mahle Filter Systems (India) to Purolator India.

The managements have also agreed to merge the two entities at a later date. Since the companies involved in the deal are not listed, the financial value of the stake transfer was not known.

Deepak Chopra, president and group chief financial officer of Anand Group, which owns Purolator India, said the aggregate turnover of the two companies was around Rs 235-240 crore (Rs 2.35 – Rs 2.4 billion) for 2004-05, growing at 16-18 per cent in the current financial year.

MFS picked the 50 per cent stake in Purolator India, partly from ArvinMeritor, an US based automotive component firm and the balance from some Anand Group companies.

The exit of ArvinMeritor from Purolator was a move planned by the American firm, which, as part of its global restructuring exercise is exiting businesses that have a strong replacement market orientation.

"Filter systems are increasingly becoming a consumable in vehicles. Moreover ArvinMeritor would not be able to devote resources in new product development in this line

of business," said Chopra.

Chopra said the joint venture with ArvinMeritor for two of the Anand group companies would, however, remain unchanged. ArvinMeritor is a joint venture partner in the group's flagship company Gabriel India that makes shock absorbers, struts, front forks and Arvin Exhaust India that manufactures exhaust systems.

The present deal inked between MFS and Purolator would bring three filter system manufacturing units under the Anand Group, one each in Parwanoo (Himachal Pradesh), Khandsa (Haryana) and third unit in Pune
belonging to Mahle Filter Systems India.

"The deal with MFS also opens up big opportunities for exporting our products to Germany," said Chopra.

Until recently Kirloskar Oil Engines held five per cent stake in Mahle Filter Systems India, which the German company bought recently making it its fully owned subsidiary.

Win-win alliance 

• Mahle Filtersysteme buys 50 per cent in Purolator India for an undisclosed sum.
• The two entities are to be merged to form the country's largest filter systems maker with a combined turnover in excess of Rs 270 crore (Rs 2.7 billion) in the current financial year.
• German firm gives Purolator 50 per cent in Mahle Filter Systems India.