Date: 2013-08-01

Gabriel India Engine Bearing Divestiture Cleared

Gabriel India Engine Bearing Divestiture Cleared

India's High Court of Judicature in Mumbai has approved the Gabriel India's plan to divest its engine bearing division, effective April 1.

Gabriel India Ltd. (a publicly traded division of Anand Automotive Systems, India; BSE SMALLCAP: 505714) revealed last September 2006 that it decided to sell off its Engine Bearings Division to Federal-Mogul Corp. (USA; operating under Chapter 11 bankruptcy protection since October 2001).

Gabriel India manufactures ride control products and automotive components, such as shock absorbers, struts, 2-wheeler front forks, and engine bearings. Gabriel is a leading engine bearing supplier to India's OEM automotive and replacement markets, as well as to heavywall applications such as rail, marine and power generation equipment. Bearings are also exported to North America, Europe, Singapore and the United Kingdom.

By name, Engine Bearings division is half of Gabriel India, whose only other division is Ride Control. However, Engine Bearings contributes less than 7% of sales.

Gabriel manufactures engine bearings in two vertically-integrated plants -- Parwanoo (Himachal Pradesh) and Khandsa (Gurgaon) -- with a combined capacity of 23 million pieces per year.

Both plants are equipped with their own effluent strip plating lines, induction heat treating furnaces, sinter lines, automatic presses, and high speed boring and broaching machines.

The other key player in the spinoff is Federal-Mogul Corporation, which currently owns 5.15%, or 3.7 million shares, of Gabriel India Ltd.

Under the divestiture terms, Federal Mogul will take a preferential buy-in to accumulate a majority ownership position in the new bearing company created via the spinoff.

After the divestiture, Gabriel will remain India's largest manufacturer of shock absorbers and McPherson struts assemblies. It started in 1961 as a joint venture with Gabriel Products Company (USA).

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