CHENNAI: The Coimbatore-based Shanthi Gears Ltd, amongst the largest gear and gear-box manufacturer in the country is scouting for partners. The partner would be offered equity, even as it is not known how much stake the company is willing to offload.
According to sources, Shanti Gears has mandated Ernst & Young to find a "strategic player" who could bring in newer technologies which can spur the next level of growth. The maker of industrial gears and gear products is learnt to be in discussions with companies based in Germany and the US for a possible tie-up that would involve a stake sale. While some sources believe that the promoters of the company could be planning a "sell out", company insiders rubbished it by saying that the hunt was on, only for strategic partners. It is learnt that the company has been in talks with various players for quite sometime.
Based on the July 11 closing price (Rs 66.15 a share), the promoters stake of 44.69% is worth Rs 241.5 crore. The financial institutions and mutual funds hold 25.31%, while individuals and bodies corporate have a cumulative stake of 30%. The foreign players are believed to be insisting on taking a substantial stake with voting rights.
However, Shanthi wants to give only a small stake without any voting rights. It is insisting that the tie-up was only for expanding the product line and bringing in the latest technology since there are enough opportunities to grow in the domestic market.
PKR Kurup, CEO of Shanti Gears, did not wish to talk about the nature of talks his company was holding with partners nor did he confirm stake dilution plans.
Shanthi Gears reported revenues of Rs 244.13 crore and had a net profit of Rs 44.16 crore for fiscal 2008. The company makes a range of power transmission products including gears, gearboxes, geared motors and gear assemblies. Its product range includes worm gear boxes, helical and bevel helical gear boxes, geared motors, custom-built gear boxes, mill gear boxes, open gearing, products for the textile industries, and CNC machine tools. Besides, the company offers consultancy services for engineering design.
Shanthi Gears has six manufacturing units in Coimbatore in Tamil Nadu with facilities for manufacturing patterns, centrifugal castings of phosphor bronze rings, aluminum castings, ferrous castings; heat treatment, forgings, fabrications and cutter manufacturing. It has its own wind mills with capacity of 5.16 MW. The company has upgraded its manufacturing capabilities to high-end gear boxes for windmills, gear boxes for rolling mills, gears for aviation and defence helicopters.
