Sandhar Technologies, the Tier 1 manufacturer and supplier of vehicle door handles and lock systems, is aggressively diversifying its business and expanding its already expansive product line-up.
On December 18, the company announced a partnership with South Korea’s Daeshin Machinery with an aim to venture into the manufacture and supply of gearshift levers and parking brakes to passenger car manufacturers in India.
The 50:50 JV will see the introduction of gearshifters for both manual as well as automatic transmission systems including AMTs in Sandhar’s portfolio and while Daeshin will stand as being the technology provider, Sandhar will take care of the marketing, local sourcing and local manufacturing operations, which are expected to begin from CY2019 once talks with OEMs are materialised.
Daeshin, which is a key supplier to GM Korea, Tata Daewoo Commercial Vehicles and GM’s major entities across the globe, intends to scale up and attract more OEs into its basket with this new association. According to Jae Hyun Lee, president, Daeshin Machinery, “This JV will give us a big opportunity to target existing players in India as well as new entrants like Kia Motors and develop a relationship with the Hyundai Group to provide localised gearshift and parking levers to the new company's model offerings in the country.”
L-R: Jae Hyun Lee, president, Daeshin Machinery and Jayant Davar, founder, co-chairman and managing director, Sandhar Technologies at the joint venture announcement in New Delhi.
According to Jayant Davar, founder, co-chairman and managing director, Sandhar Technologies, “This tie-up will typically target new models coming into the market in 2019. While the preliminary introduction about the venture has already been done with all the major OEs, right now we are in the phase of getting RFQs for these components. Once we give our quotations and finalise what parts are to be supplied for which specific models, we will list out the equipment that is required to manufacture these components here in India.”
“While the total investment into the project will depend on the vehicle models, technology, localisation level and on the volumes, in a broader sense, if we were to localise the entire technology, then it is going to be in the ballpark of US$ 15-20 million (Rs 100-128 crore). Initially, it is possible that we could use one of our existing facilities depending upon the location of our customer,” said Davar.
“Although we are targeting complete localisation at the start of production, it would solely depend on the volumes of the orders. Our aim is to leverage Sandhar’s capabilities and keep the pricing as competitive as possible,” he added.
Sandhar gears up for IPO
This latest collaboration is Sandhar's 16th such engagement, eighth in the direct manufacturing arena and second in FY2017-18 after it struck a JV with Korea's Daewha Fuel Pump in May this year. The company is now in the process to get listed and float an IPO at the start of the new year.
“We have been diversifying and investing in new businesses in the recent times, where we have spent close to Rs 600 crore over the last five years. Having made these investments, we now want to retire the debt so that our profitability jumps up and hence, we have applied to the SEBI on December 7 and we should get the clearance by middle of January 2018. After that, we plan to launch the IPO by middle of February 2018.”
“Once our share gets listed, then there is a price discovery about the valuation of the company and on that basis, we can further raise capital by qualified institutional placement (QIP), whenever we look for new acquisitions in the future,” concluded Davar.