TVS Group raises stake in tyre subsidiary

Chennai: Taking a leaf out of the books of India Inc’s leading business houses— the Tatas and the Birlas — Chennai-based TVS Group is tightening its grip over group companies.

Not so long ago, the group signed a watershed deal with Japan's Suzuki Motors by buying them out from its flagship TVS Motor Ltd – then TVS Suzuki Ltd – for a song. The TVS Group is now consolidating its holdings in group companies with diversified interests.

The latest is the group’s move to increase its stake in TVS Srichakra, one of the leading two-wheeler and three-wheeler tyre maker from the Southern part of the country. TV Sundaram Iyengar and Sons Ltd, the holding company of the TVS group, has increased its stake in the two-wheeler and the three wheeler tyre maker by 2.3%.The stake of the parent company has gone up from 23.39% as in March 2010 to 25.69% in July 2010. The total promoters holding in the company has risen from 42% as on March 31, 2010 to well over 44.3%. The unlisted holding company lapped up shares of TVS Srichakra through the creeping acquisition route.

The promoters had bought the stake in TVS Srichakra from the open market in small tranches at different price levels.

Incidentally, TVS Srichakra is one of the companies in which the TVS group holds less than 45% stake.

The company stock closed on the National Stock Exchange (NSE) on Friday at Rs 273.90, down 1.92%. The stock, with a face value of Rs 10, has an yearly high of Rs 317.95 and an yearly low of Rs 72. The stock has seen a run up recently after the promoters started buying from the open market.

TVS Group, which has over 33 companies under its belt, had 10 companies listed on the stock exchanges. In most of the companies, the Group holds well over 40% stake.
Incorporated in 1982, TVS Srichakra makes over 11 lakh tyres year. This includes two-wheeler and three-wheeler tyres, industrial pneumatic tyres, farm and implement tyres, floatation tyres etc.

For the financial year 2010, the company clocked a turnover of Rs 700.74 crore and netted a profit of Rs Rs 29.81 crore.