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Home arrow Alliances and Joint Ventures arrow MAN to increase its stake in JV with Force Motors to 50%
MAN to increase its stake in JV with Force Motors to 50% Print E-mail
Written by Ganesh   
Thursday, 04 December 2008

Germany's MAN to buy 14.2% stake in MAN Force Trucks Pvt Ltd for Rs 300 crore

Pune : MAN AG will raise its stake in MAN Force Trucks Pvt Ltd, its joint venture with Force Motors to 50 percent through a stock buyout and rights issue. The stake sale to the extent of 14.20 per cent of the equity of MAN FORCE TRUCKS will be made by Force Motors to MAN at the consideration of approximately Rs.300 crores (Euro 49 million).

Additional equity by Rights issue to the extent of Euro 40 million – approximately Rs.250 crores – will also be raised.

Anton Weinmann, Chairman, MAN Nutzfahrzeuge AG, said, 'MAN is happy to increase its shareholding percentage and equally its participation in the management. This reaffirms our commitment to India and to this JV.'

Commenting on this, Mr. Abhay Firodia said, 'with the project phase behind us, the JV is now ready and enabled to attain its full potential.'

The stake sale to the extent of 14.20 per cent of the equity of MAN FORCE TRUCKS at approximately Rs.300 crores (Euro 49 million) pegs the enterprise value for the entire company in excess of Rs.2000 crores.

What's in store

It is also mutually agreed between the Partners that a strong effort will be made to produce for India, more models of vehicles which are suited to Indian market requirements i.e. the price and the cost of such vehicles should be moderated in keeping with the expectations of the Indian market. For this purpose, a line of trucks and bus chassis will be designed, developed and introduced over the next months. This is to enable a wider footprint, and thus a greater opportunity, for success in the Indian market. The import and sales of MAN's high power TGA range (above 300 HP) will also come under the business purview of the JV. This will enable full range extension into the 400 HP + market as well.

In addition to developing and producing a number of models which are sold in India, now approximately 21 different models are also developed for export. This is done at the request of MAN, who sees a significant export opportunity and have taken up the responsibility for export of products produced by the JV – through their global network in various markets, the principal ones being Africa, Middle-East, Russia and large parts of Asia. The initial export consignments have been well received.

The value chain for supplies is re-organised so that, in addition to the production of Cabs which Force Motors is doing today, Force Motors will also take up manufacture of the range of Axles for the JV.

These arrangements will come into effect over the next several weeks. It is mutually agreed by the Partners to ensure that the JV succeeds both in the Domestic and Export markets to the fullest potential. An agreement to this effect was concluded in Munich on Tuesday the 2nd of December.

Management

The Chairman will be a FORCE nominee. The Vice-Chairman will be a MAN nominee. In addition to the CTO who is today a MAN nominee, in future one of the two Managing Directors of the company will be a MAN appointee, who will be responsible for Production, Technology and Logistics, and will work in close co-ordination with the other Managing Director who will be appointed by Force Motors, and will be responsible for the balance operations, including Sales, Purchase, Finance, etc, the two Managing Directors working as a team, with the executives of MFTPL to ensure success.

So far the FORCE participation has been 70 per cent and the MAN participation at 30 per cent. Over the last several years, a 'Complete Business', for production of heavy commercial vehicles, including a very competent plant, to produce Engines, Axles, Cabs and for assembly of Vehicle Chassis has been created. The company has established a large supplier base, for components so as to reach a level of local content of approximately 85 per cent.

 
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