Falcon Tyres Divesting to Remain Listed

A chunk of Ruia Group company Falcon Tyres will be sold in order to increase ouput at its factory in Mysore, eastern India, and to ensure its promoters shareholder remains below the 75 per cent required to stay listed on the Bombay Stock Exchange. The share, according to Indian media, is to be sold to a private equity firm for Rs 1 billion (£12.6 million).

“We are in the process of preparing our presentation and hope to be through with the placement within the next two months,” Falcon Tyres chairman Pawan Kumar Ruia told the Hindu Business Line. Ruia reports that the promoters’ share in the company went up to 86 per cent following the recently concluded open offer requiring either a public issue or private placement.

“We are planning Rs 300 crore (£37.7 million) of investments to nearly double the capacity of Mysore plant to 14 lakh (1.4 million) pieces a month. We have tied up Rs 100-crore (£12.6 million) loan from a nationalised bank, another Rs 100 crore is expected to be tied up soon and the balance is proposed to be raised through equity route,” Mr Ruia said.

Falcon produces 750,000 tyres a month. Of this, approximately 450,000 tyres are sold as OE primarily to Hero Honda and Bajaj, another 250,000 tyres in the replacement market under Dunlop brand, and the balance exported to countries such as Brazil, the UAE and Bangladesh.

“The production is slated to go up to nine lakh (900,000) tyres a month shortly. We are hopeful to complete the expansion to 14 lakh tyres by 2010-11,” Ruia said. “Falcon witnessed more than double the topline growth in the last four years. We expect to clock further growth in this fiscal.”