Rane Brake Lining-Nisshinbo to pick up additional 8% stake

2 Mar 2009, 1938 hrs IST, ET Bureau

CHENNAI: The board of Rane Brake Lining, flagship of Rane group, has decided to allow its Japanese technology partner, Nisshinbo Industries to pick up an additional 8% stake by investing Rs 3.5 crore in equity at premium.

For long, the foreign partner is having a 10% stake in RBL, which is a leading manufacturer of brake lining products for commercial vehicles and passenger cars.

RBL informed stock exchanges on Monday it has been decided to issue 7 lakh fully paid up shares of Rs 10 each at a premium of Rs 40 per share on preferential basis as per Sebi guidelines to Nisshinbo.

An EGM will be held on March 30 to get the approval of shareholders. The issue price will be close to the current market price of RBL.
In the Rs 7.21 crore paid up capital of RBL, the Indian promoters hold 42.72% stake. Since 1996, the Japanese partner is holding 10% stake.

Rane group chairman, L Ganesh told ET, " We have been getting their best technology and R & D support for long. Last year, they wanted to increase their holding".

Further, he said " With Japanese and Korean players dominating the Indian car market, the additional stake will help in getting the latest technology from Nisshinbo and expanding our customers in the Indian and export markets.

Globally, its major customers are Toyota, Suzuki and Nissan. In Korea, it is supplying to Hyundai through its subsidiary:.

RBL is already a major supplier to Maruti Suzuki. For Toyota, it is supplying for Innova. There is scope to expand the tie up for the small car project of Toyota.

Reeling under the severe down turn in the vehicle sector, RBL reported a loss of Rs 1.81 crore in the third quarter ending December 31, 2008 on a net sales of Rs 42.83 crore.