INDIA BUSINESS WORLD - FEBRUARY 16th - FEBRUARY 29th - 2008
AMTEK AUTO IN 50:50 JV WITH US RAILCAR CO
As part of an aggressive plan to diversify beyond its automotive businesses, Amtek Auto has signed a memorandum of understanding with American Railcar Industries for a 50:50 joint venture. This will mark the auto component major’s foray into the railcar business.
Amtek Auto has recently set up a separate division, Amtek Transportation System, to expand its portfolio to transportation. The joint venture with American Railcar Industries will be a part of that division.
Amtek has planned a total outlay of Rs 500 crore for its railway business. Of this the JV with American Railcar will attract Rs 300 crore and the remaining Rs 200 crore will go into a forging, casting and machining facility to make components for railcars and other railway applications.
The JV will use an equal mix of debt and equity, with each partner raising around Rs 150 crore. Amtek expects the railway, aerospace and surface transport segments to clock around Rs 1,500 crore in annual sales in the next four years. It is also looking for other potential acquisitions in this space.
Amtek’s reasons for diversifying its spread are better margins. The transportation business is expected to balance the diminishing margins and slowdown in the auto business.
American Railcar Industries Inc is a leader in railcar manufacturing, and leading designer, manufacturer and marketer of a variety of railcars in North America.
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