Indian auto components manufacturer Sakthi Automotive has sold its insolvent German business to the US-based MAT Holdings for an undisclosed amount.
MAT Holdings has already set up a German subsidiary which will take charge of the operations of the Indian company's two foundries in Neuenkirchen in Saarland, bordering France and in Ueckermuende in eastern Germany latest by the beginning of June, German Insolvency Administrator Udo Groener said.
Sakthi Germany applied for insolvency in November 2008 end after cost-cutting measures, including the introduction of short working hours and retrenchment of around 200 workers of around 900 failed to reverse the decline and stabilise business.
The proceedings started on February 1, 2009.
On Wednesday, the deal for takeover of Sakthi Germany's two foundries in Neuenkirchen and in Ueckermuende was approved by the company's creditors, workers' council and the engineering workers' trade union IG Metall, Groener said.
According to media reports, the company was offered bridging financial assistance by the state governments of Saarland and the eastern German state of Mecklenberg Pomerania to overcome its payments difficulties.
The US-based company has given a long-term operational guaranty for the two plants and also promised to keep the present labour force of 437 workers in Neuenkirchen and 257 in Ueckermunde, he said.
Sakthi Automotive group, which belongs to the Sakthi Sugars Ltd in Coimbatore, is Indian manufacturer of automotive components and specialises in manufacturing high quality castings for a wide range of applications.
It had acquired the two foundries from the American company Intermet in May, 2007 reportedly for USD 130 million and manufactured a range of auto components including axles,gear units and brakes for cars and trucks.
Its customers included Daimler, BMW, Volkswagen, Suzuki and Citroen.
The company employs around 3,500 people at three production locations in India and at three plants in Europe.
Besides the two German foundries, Sakhti Automotive has a plant in Arvika, in Sweden.