Varroc open to equity alliance with Delphi

by 06 May 2006

The Aurangabad-based Varroc Engineering is keen on strengthening its relationship with Delphi Corporation through an offer of equity up to 49 percent in the near future. The two companies have recently formed a technical partnership to manufacture catalytic converters for motorcycles at a new plant, Varroc Exhaust Systems, in Chakan near Pune.

Tarang Jain, managing director of Varroc, told Autocar Professional, “We are keeping our options open and that explains why this product is in a subsidiary company and not part of our parent. We formed a 100 percent arm and we have mutually agreed that at some point of time, we will offer Delphi up to 49 percent while we will hold 51 percent.”

The idea of going in for a technical alliance right away was to save on time as it was Delphi’s view that a joint venture would have taken a longer while in terms of getting approvals from its board. The partners could not afford this as their critical customer, Bajaj Auto, wanted the facility commissioned quickly. Jain said Delphi had suggested that the plan kick off as a technical tie-up and move on to a joint venture at a later date. Though the initial focus will be on supplies to Bajaj, Varroc Exhaust Systems has already initiated talks with other potential customers like Honda Motorcycle & Scooter India (HMSI), Suzuki and Yamaha.

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