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Bharat Forge buys out German major

Mumbai, Nov. 22: Bharat Forge, the auto component major, has acquired Carl Dan Peddinghaus GmbH (CDP), one of the largest forging companies in Germany, for an undisclosed amount.

The acquisition is expected to catapult Bharat Forge to the slot of second-largest forging company in the world.

In an asset purchase deal, Bharat Forge will acquire 100 per cent of the fixed assets, inventory and business of CDP through a suitable special purpose vehicle with effect from January 1, 2004, a company release said here.

The deal would be funded through internal accruals.

Senior officials, including chairman and managing director Baba Kalyani, were not available for comments.

CDP, founded in 1839, is headquartered in Ennepetal near Dusseldorf and currently employees 790 people. The company recorded sales of €116 million in 2002.

The company is a major supplier of critical chassis components to automakers like BMW, Volkswagen, Audi, Daimler Chrysler and Volvo.

The memorandum of understanding (MoU) between Bharat Forge and CDP was signed in Ennepetal near Dusseldorf, Germany on Friday.

“The acquisition reinforces our long-term strategy of expanding both organically and inorganically. This will help Bharat Forge strengthen and expand its business in Europe through the addition of new customers, and strengthen ties with existing customers through enhanced technology capability,” said Kalyani.

The Rs 700-crore Bharat Forge is the flagship company of the Rs 2500-crore Kalyani Group. Bharat Forge is the largest forging company in Asia. The company manufactures forgings and machined components for the automotive, diesel engine, railway, earthmoving, cement, sugar, steel, coal, ship-building and oilfield industries as also general engineering equipment.

The acquisition of CDP is part of its plan to be among the top three global players.

Exports make up about 40 per cent of the Bharat Forge’s sales. However, the company has been diversifying its export basket in terms of products, customers and countries. Bharat Forge has strengthened its presence in Europe and has also entered the Chinese market. China is now identified as the second-largest market of the company.

Bharat Forge now has various international customers like DaimlerChrysler, Volvo, Renault Vehicle Industries, Honda, Cummins, and Toyota.

Exports to Renault Vehicle Industries, the second largest truck manufacturer which commenced in the previous fiscal, will see Bharat Forge supplying 11 parts to the company.

Though US is the single largest geographical market for the company, the share of the country in the company's total export basket has come down from 90 per cent to 67 per cent in the previous year.

In Europe, BFL supplies of front axle beams to Renault and the company has a long-term contract to supply 11 parts to Renault for its global range of heavy trucks.

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