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Stock Report
FCI OEN Sale of Automotive Connector Business
Posted On : 2006-12-13 20:53:01( TIMEZONE : IST )
FCI OEN Connectors Ltd has announced that the Board of Directors of the Company at its meeting held on December 12, 2006 has agreed to the sale of its Automotive Connector business to FCI Technology Services Ltd, Cochin, a 100%-subsidiary of FCI Asia Pte Ltd, Singapore, subject to the approval of the Shareholders as required by Section 293(1)(a) of the Companies Act, 1956 and the approval of FIPB for FCI Asia Pte Ltd to undertake the Automotive Connector Business.
The Company has been operating the Automotive business for over seven years now, and while the business is performing satisfactorily, it remains a very small part of the Company today. The growth of the Company has been driven by the Communications business, which continues to perform strongly. For the last six months, the Communications business has outperformed management expectations, while the Automotive business has been moderately affected by some of the headwinds in the global auto industry. Given recent internal analysis, there now exists an opportunity for the Company to receive business transfers from the Communications business of the Company abroad, providing the Indian Communications business with an opportunity for marked growth in this segment. Hence the Board of Directors concluded that the Automotive Connectors business is non-core to the current strategy of the Company, and that it needs to focus heavily on the fast-growing Communications business.
M/s Varma & Varma, an independent audit firm, valued the Automotive business of the Company as on December 10, 2006. Based on the valuation, Board of Directors fixed the sale consideration at Rs 258.2 million plus value of fixed assets and inventories for Automotive business to be acquired by the Company from December 10, 2006 to the effective date of sale. The effective date of sale is fixed at December 31, 2006. The above sale consideration includes the value of all intangibles, fixed assets and net current assets exclusively used for the Automotive business, but excluding the factory land, building and its furnishings.
