The Board of directors of Chennai-based Harita Seating Systems Ltd (HSSL) and Minda Industries Ltd (MIL) at their respective meetings held on February 15 approved the merger of HSSL with MIL through a Composite Scheme of Arrangement.
A TVS Group company and a Tier 1 major, Harita Seating Systems (HSSL) will be integrated into Indian components giant Minda Industries (MIL). The Boards of both the companies have approved the exchange ratios based on the recommendations of the joint valuation report by independent valuers.
Harita, which is the leading manufacturer of seating systems in India,specialises in manufacture and supply of safe, ergonomic and reliable driver seats and bus passenger seats. Harita seats are used in the commercial vehicles, buses, off-road vehicles and tractors. Harita units are certified for IATF 16949, ISO 14001 and OHSAS 18001. Harita has a NABL - ISO / IEC 17025 : 2005 certified laboratory.
Nirmal K Minda: "We were looking for expansion into systems supplies in our strategic range and this was a good opportunity. This integration will add value to alongside opening bigger avenues for HSSL. A win-win for both companies.”
Speaking to Autocar Professional, Nirmal K Minda, chairman and managing director, Minda Industries, said, “We were looking for expansion into systems supplies in our strategic range and as a result, this was a good opportunity. The trust factor for this merger came from our close association with the TVS Group, which lasts well over 30 years. Also, this integration will add value to our current shareholders alongside opening bigger avenues for HSSL, and thus is a win-win at both the ends.”
H Lakshmanan, chairman of HSSL, said, “The merger of HSSL with MIL will generate additional value for our shareholders by providing access to diversified product mix so as to deliver significant near- and long-term growth. Thus, the decision to join forces with the Minda Group, positions the business better than most to share in this huge growth opportunity, especially, as these are truly very interesting times."
The entire merger process will be completed over the next nine-to-ten months. Minda Industries aims to grow HSSL’s business by leveraging customer as well as product synergies between the two entities. While expansion in the two-wheeler space with new customers remains the immediate focus for Minda, Harita is gradually expected to get larger access into the Indian OEM ecosystem by venturing into the passenger vehicle (PV) arena, where it has no presence at this point in the country. Interestingly, its German technology partner Fehrer is a strong player in the PV space in Europe.
“We are at the drawing board right now and while two-wheelers remain the low-hanging fruits, we would in parallel study the customer requirements in the PV space and eventually approach new clients. We are at a very preliminary stage, but once we take HSSL into our fold, we will raise this strategic discussion with its technology partner,” added Sunil Bohra, chief financial officer, MIL.
Minda expects to gain technology access to contemporary seating functions such as heating, ventilation, memory function and others from Fehrer. “We would be able to localise and bring such high-end solutions to the low-to mid-level segments which are the most popular ones in our country,” said Minda.
“We are looking at increasing our kit value and we should also be able to leverage our aftermarket channels by introducing Harita’s products for the end customer directly into the market,” he added.
The components giant aims to work in tandem with the five-year plan laid out by HSSL’s management and targets to double the revenue over the next four-five years, which currently stands at Rs 1,000 crore (of which Rs 500 crore is demarcated under the listed entity – HSSL).
With FY2019 being a slow year for India Auto Inc, Minda Industries expects to better the industry growth rate and has projected an over 20 percent year-on-year growth in revenue by March-end. The company is also bullish about growing its clientele with Kia Motors and MG Motor entering the Indian passenger vehicle market in this calendar year.