The stock had surged in May 2006 after US auto parts maker Federal-Mogul acquired Indian promoters’ stake, raising its holding to over 50%. From Rs 212.05 on 5 May, the stock surged 75% to a high of Rs 371.35 on 17 May. It had given up a large part of those gains later in a weak market, to hit a low of Rs 224.65 on 14 June. From that low it surged to Rs 306.25 by 22 June.

The decision to consider a rights issue boosted the Goetze stock as it indicated increasing commitment of Federal-Mogul to the Indian unit. If a rights issue is recommended by the company’s board, Federal-Mogul will be required to subscribe to its portion of the issue.

The buy-out of most of the Indian promoters’ stake by the foreign promoter has already raised expectation that the US-based auto parts major may use Goetze as an outsourcing hub. Federal Mogul is a leading auto-ancillary company and is very strong in the diesel vehicles segment. It supplies ancillaries to auto majors like General Motors and Daimler Chrysler.

Goetze (India)'s product range covers piston rings, pistons, cylinder liners, light alloy castings and sintered products. The company is the largest manufacturer of pistons and piston rings in India. Within the OEM segment, Goetze’s revenues are spread across all auto players including Tata Motors, M&M, Bajaj Auto and TVS.

In February 2005, Goetze had signed a technology agreement with Federal Mogul to use specific proprietary technology of the latter for manufacturing contemporary pistons.

For Q3 December 2005, Goetze reported 3.5% growth in net profit to Rs 5.88 crore (Rs 5.68 crore). Net sales rose 12% to Rs 121.73 crore (Rs 108.66 crore).