Indian company to acquire 80% stake in two Sri Lankan bicycle manufacturers
Chennai-based Tube Investments of India Ltd., a company specializing in engineering bicycles, has reportedly entered into an agreement to acquire an 80% stake in two Colombo-based premium bicycle makers. The deal has been signed for US$ 3.34 million.
TI Cycles of India is one of the leading bicycle manufacturers in India, a part of the US$ 4.7 billion Murugappa Group.
The company in a stock market disclosure has reportedly stated on 7th of December that it had entered into an agreement with Shuyuan Gan, the promoter and 100% shareholder of Great Cycles Ltd. and Creative Cycles Ltd., both in Colombo to acquire an 80% stake of the share capital of each company for US$ 3.34 million and a sum equivalent to 80% of the applicable net working capital as on 30th of November.
It has been stated that the acquisition of the two companies engaged in manufacture of premium bicycles is part of Tube Investments’ strategy to secure the backend supply chain in the mass premium and super premium segments of its bicycles division.
Creative Cycles and Great Cycles have manufacturing facilities in the Katunayake Export Processing Zone, Colombo with a capability to produce a wide range of bicycles, from kids to performance cycles, from steel to alloy bikes.
“With this acquisition, we will be able to grow the market for premium cycles and our market share in the premium segment even more aggressively,” Tube Investments Managing Director L. Ramkumar has reportedly said.
“We’re looking forward to working closely with TI Cycles as an integral part of their global supply chain,” Creative Cycles & Great Cycles Founder and Director Shuyuan Gan has been quoted as saying.
The entrance of a subsidiary of a large Indian company into the Sri Lankan market would pave the way for other Indian companies also to consider forming joint ventures with Lankan companies. Local businesses could exploit this opportunity and penetrate into the Indian market. Both, Indian and Sri Lankan businesses are further benefitted by the free trade agreement (FTA) between the two countries. Hence, it would be the ideal business partnership that would bring best returns to stakeholders.
|Article Code :||VBS/AT/13122017/Z_7|