News: Bharat Forge in talks with Corus

(DNA 11/10/2006) Mumbai - The Kalyani Group, which runs Bharat Forge, the world’s second-largest forging company - the largest is Germany’s ThyssenKrupp — is said to be talking to UK-based steelmaker Corus for possible buyout of some businesses.

Senior management of the Kalyani Group and Corus are expected to hold talks this week, according to a report by Reuters from London.

According to the report, any such deal could happen only after the Tata-Corus issue is settled. The sources said Tata was not in any three-way negotiation currently.

Amit Kalyani, executive director, told DNA Money he was travelling and was not in a position to comment on the issue.
Meanwhile, sources said the Pune-based firm may be talking to the $9 billion auto parts giant ArvinMeritor too for possible acquisitions or joint ventures.

The talks are said to be related to some parts businesses of the US major. Bharat Forge already has an equal stake venture with ArvinMeritor’s trucks parts division.

ArvinMeritor, which has 120 manufacturing facilities in 25 countries and employs 29,000 people, supplies integrated systems, modules and components such as front and rear axles etc to the motor vehicle industry.

The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. In the trailing four quarters to July, 2006, the company had ratcheted up a net profit of $80 million, though for the year ended September 2005, the company had posted a net loss of $12 million.

Interestingly, ArvinMeritor, based in Troy, Michigan, has among the lowest analyst ratings in Standard & Poor’s 400 mid-cap index. Only last month, Goldman Sachs had downgraded the company to “underperform/cautious” from “in-line/cautious” due to weakening fundamentals.

Standard & Poor’s itself has placed ArvinMeritor on CreditWatch with negative implications reflecting concerns over ARM’s ability to return currently weak credit metrics to levels acceptable for the rating in light of worsening industry fundamentals.

Baba Kalyani, chairman and managing director of Bharat Forge and the Kalyani Group, had said at the company’s first-quarter earnings call that the company will be targeting new avenues for growth in the non-automotive component business.

The company is said to be entering into nuclear energy, hydrocarbon, aerospace, mining and metals, through an outlay of Rs 350 crore.