India Inc pitches for Delphi's assets

Sona Group, Minda Huf, Amtek Auto in talks for bankrupt US firm's units.

A clutch of Indian automotive component manufacturers is planning to acquire the assets of the $29-billion component giant Delphi Corp, which has filed for bankruptcy.

One of the Indian firms in the fray is Delhi-based Sona Group, which has initiated talks with Delphi for buying its steering systems business in the US. Delphi filed for bankruptcy last month under Chapter XI of US laws.

Sona Group sources, confirming the development, said talks had been initiated without involving investment bankers or any other external agency. "Our interest is restricted to Delphi's steering systems business in the US," said a company executive.

It is learnt that a Delhi-based investment banker has approached even tier-II players with indicative offers on Delphi's assets. Two such companies are Noida-based Minda Huf and Gurgaon-based Amtek Auto. Another Delhi-based components conglomerate is discussing the matter internally.

Delphi Corp admitted to putting up some of its non-core assets for sale. "Delphi has said it intends to sell $400 million-$500 million in non-core assets in 2005, including the previously announced $202.5 million received from the sale of our battery business. Work is proceeding on our portfolio evaluation, and announcements regarding a possible sale of additional non-core assets are anticipated in the fourth quarter. As part of Delphi's transformation plan, we must realign our global product portfolio and manufacturing footprint to preserve our core businesses. This will require a substantial segment of our US manufacturing operations to be divested, consolidated or wound up through the Chapter 11 process," said a spokesperson for the company through e-mail.

The spokesperson, however, refused to discuss the possible sale of assets in specific terms. Sources in the domestic component industry said the company's operations, particularly the suspension systems business, would be a "good buy" for Indian firms to consolidate their market share both in terms of capacity and customer aggregation at a global level.

Delphi India supplies components to many car companies in the country. It is also a supplier of steering columns, air-conditioners and shock absorbers for Maruti Udyog's recently launched Swift.

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DEAL STREET

Delhi-based Sona Group is in talks with Delphi for buying its steering systems business in the US

Delphi intends to sell $400 mn-$500 mn in non-core assets in 2005

Delphi's suspension systems business is considered a good buy for Indian firms