Rail freight car manufacturer and engineering services firm Texmaco Rail & Engineering Ltd today said it will buy out its Australian joint venture partner UGL’s 50 per cent stake in the JV firm for a token amount of Re 1.
“The company has entered into definitive documentation to purchase the entire shareholding of UGL Rail Services Ltd, Australia in Texmaco UGL Rail Private Ltd for a nominal aggregate consideration of Re 1,” Texmaco Rail & Engineering Ltd said in a BSE filing.
It added: “Pursuant to the acquisition of the aforesaid shares, Texmaco UGL Rail Private Ltd, which was a 50:50 joint venture between the company and UGL Rail Services Ltd, will become a wholly-owned subsidiary of the company.”
Earlier this month, the company had said that UGL Ltd had initiated a discussion to exit from the JV due to drying up of orders in the Australian market.
“In view of downturn in locomotive sales in Australia impacting throughput volume of UGL, the JV facility, Texmaco Rail Pvt Ltd, which was set up in India primarily for catering to the requirements of Australian market through UGL, was starved of orders and not able to operate to its potential,” the company had said.
It further said: “In view of the above, UGL has initiated discussion about the future of the project, including their view to exit from the joint venture. The matter is under active consideration.”
There will be “no material impact on the company as the unit was commissioned on April 1, 2013 and in view of the market conditions in Australia, the unit has been operating below capacity,” the company added.
In December 2010, UGL Ltd had announced that it has formalised a joint venture agreement with Texmaco Rail & Engineering Ltd.
Texmaco and UGL decided to jointly establish a manufacturing facility at Texmaco’s facility at Belgharia, in Kolkata.
Texmaco UGL commenced commercial production in 2013.
Shares of Texmaco Rail & Engineering Ltd were trading 0.18 per cent down at Rs 113.40 apiece during morning session on the BSE.