Schaeffler India announces merger of its units INA Bearings and LuK India

Mumbai: Domestic arm of German automotive and industrial major Schaeffler (formerly FAG Bearings India) on Wednesday announced merger of its two arms—INA Bearings and LuK India—to improve cost and supply-side efficiencies.

The combined entity hopes to grow 10% post-amalgamation. Under the merger scheme, Schaeffler India will issue 10 equity shares each to every 65 shares of INA India, and 35 shares of LuK India. The merger will be completed in the third quarter of 2018, subject to all approvals, the company said.

“The key objective of the merger is to combine the strengths and competencies of all three Schaeffler entities here and establish one strong listed Schaeffler entity,” Schaeffler AG chief executive Klaus Rosenfeld said in a conference call in Mumbai. He further said the new entity will have Rs3,570 crore revenues and four plants, one R&D centre and about 3,000 employees.

When asked about the revenue expectation from the combined entity, Rosenfeld told PTI that sales should grow 10% over the present rate, which he did not quantify. Under the merger plan, Schaeffler India will issue 14.64 million new equity shares, thereby increasing its outstanding equity shares to 31.26 million and up its holdings to 74.13% from the present 51.33%, and hold 100% in both INA and Luk.

He said the currently Schaeffler earns almost 75 % from industrial segment with the rest coming in from automotive segment. Schaeffler India managing director Dharmesh Arora said “Schaeffler has been present here more than 50 years, growing from a bearing manufacturer to an automotive and industrial supplier.

The merger will strengthen our position, leveraging our superior technology, quality and innovation to deliver superior solutions to our customers.” Schaeffler, formerly FAG Bearings, entered the country in 1962 with a plant in Vadodara, Gujarat and had sales of Rs1,810 crore in 2016 and 1,525 employees. And 10% of this came in from exports markets like the US, Western Europe and Southeast Asia.

Arora said in the ball and roller bearings segment the company enjoys around 20% market share and has almost all the auto OEMs as its clients, INA Bearings, set up in 1997 in Talegaon near Pune, is engaged in rolling bearings for automotive and industrial applications, precision parts for automotive engines, transmission and chassis systems.

Luk India, incorporated in 1995 in Hosur in Tamil Nadu, is into clutch systems and transmission and automation solutions such as hydraulic clutch release system, dual mass flywheel, dampeners.