Fehrer picks up 40% stake in Harita JV

CHENNAI: Harita Seating Systems (HSL), part of TVS group and its JV, Harita Fehrer (HFRL), have chalked out plans to boost their seats and poly urethane products businesses catering to different segments of the auto industry by riding on strong recovery being witnessed in the domestic market.

As part of their plan, the German partner in HFRL, Fehrer Automotive has picked up 40% stake in the JV at premium for a consideration of Rs 69.38 crore. The balance 60% will be held by HSL. As a result, it has become a subsidiary of HSL against its earlier status of a wholly owned subsidiary.

Last year, Harita had floated the JV for utilising Fehrer's expertise in the manufacture of two wheeler seats, cushions for driver seats, passenger seats for buses and seats for commercial vehicles. It was also to give HSL a cutting edge as supplier of PU foam for car seats and enable it to upgrade its PU technology.

Harita Seating Chairman and Sundaram Clayton (which had promoted Harita Seating), executive director, H Lakshmanan told ET on Monday, "The money realised on the stake sale will be utilised by HSL for capex and repay the bank loans taken for acquiring the business of Polyflex group of companies. We also have an understanding to allow Fehrer to increase its stake in the JV to 49%".

He said HSL and HFRL, with three facilities located in Chennai, Hosur and Pune, have big plans to develop and tap the seats' business for two wheelers, cars, passenger buses, tractors and other commercial vehicles besides supplying new technology PU to leading car seat manufacturers making seats for new generation cars.

"We expect a turnover of Rs 350 crore from both the companies for the current year ending March 31, 2010. In the next four years, we see this touching Rs 750 crore given the strong market for our products", Mr Lakshmanan said.

Last year, HSL along with HFRL had acquired the business of Polyflex group of companies, which included the PU foam manufacturing plants in Chennai and Bangalore and a fabrication unit in Bangalore. They also acquired the movable assets of Polyflex at Pune.

HFRL acquired the Chennai unit of Polyflex and this paved the way for Harita Seating becoming a PU tier II supplier to reputed car seat manufacturers like Hanil Lear, Tata Johnson Controls, Lear and Toyota Boshuku. They cater to major car manufacturers like Tata Motors , Hyundai, Toyota- Kirloskar, M&M and Ford.

After the takeover, the companies have consolidated the locations by shifting the production facilities from Bangalore to Hosur. Besides PU foam, the JV will make other new technology PU products like long fibre injection moulded components (LFI) and micro cellular urethane products (MCU).