Precision Camshafts has bought out the 49 percent stake of its UK-based partner, G Clancey in Clancey Precision Components, the 100-percent export oriented joint venture. Last September, Yatin Shah, managing director, had told this correspondent that the deal would be finalised in 3-4 months. “We have set the ball in motion to buy out our partner’s stake,” he had said then.
The buyout, whose value is not known, is part of the Rs 100 crore outgo (which will be at a debt, equity ratio of 3:7) earmarked for this calendar. “The acquisition is an important step for Precision Group’s long-term business strategy as it removes restrictions on direct marketing which was bound by the JV agreement,” Shah said at a press meet in Pune recently. Precision is in talks with four equity funds for the balance Rs 70 crore. “The challenge now is to tie up with a fund that has a long-term view and one that recognises the strengths of this company and its managing team,” added RR Joshi, finance head.
The company has also put in Rs 7 crore to set up a facility in Uttaranchal that will meet the needs of Tata Motors. It is also planning to invest Rs 20 crore to set up a machine shop in Chennai near the Hyundai facility. “The Korean automaker has nominated us for a Rs 35 crore order for machined camshafts,” Shah said.
In addition are new export orders Precision has won from Porsche and BMW worth Rs 25 crore. It will supply two lakh tri-lobe camshafts annually to the machinist of Porsche for the Boxster, as well as 2.5 lakh profiled hollow camshafts to the machinist of BMW for the 3 Series. Going forward, the company aims to increase its turnover of Rs75 crore in 2005-06 to Rs 125 crore in 2007-08. “We are targeting the Rs 350 crore mark by 2010,” Shah said.
By this time, Precision would have increased annual production capacity to 12 million camshafts from 3.3 million. The company has 85 percent share in the domestic market where the clients include Tata Motors, Maruti, Ford and Hyundai.