The initial consideration payable by Renold is around Rs 48 crore, subject to adjustment through completion of accounts, LGB on Wednesday informed the Bombay Stock Exchange.
The actual consideration is to be calculated as multiple of Ebidta (earnings before interest, depreciation, taxes and amortisation) for the two years ending on March 31, 2009. The minimum consideration is around Rs 55 crore and maximum is around Rs 72 crore.
LGB would provide an established manufacturing base and sales distribution network.
"This network would enable Renold to promote its existing product range in India's rapidly growing market."
The products manufactured in India through the JV is expected to be sold in about 90 countries.
Renold and its group companies may outsource the products from the parent company and discussions in this regard have also been positive, the company stated.
LG Balakrishnan & Bros reported a drop in standalone net profit for the fourth quarter ended March 2008 due to a substantial fall in operating margin. During the quarter, the profit of the company declined 67.62 per cent to Rs 4 crore from Rs 12 crore in the same quarter, previous year.