Samvardhana okays sale of JV with Marelli to Gabriel India for Rs 60 crore

Samvardhana Motherson International Ltd today approved the sale of fixed assets and inventory of its joint venture company Marelli Motherson Auto Suspension Parts Pvt Ltd to auto component maker Gabriel India Ltd, according to an exchange filing. The joint venture partners will receive approximately Rs 60 crore (INR 600 million) from the sale subject to true up at closing date. The transaction is expected to be completed by April-June quarter of 2025-26.

“After multiple years of operation, both JV (joint venture) partners have mutually agreed that the current product portfolio offered under MMAS (Marelli Motherson Auto Suspension) is not aligned with the strategy in India,” Samvardhana Motherson said in a statement. 

Marelli Motherson Auto Suspension is a 50:50 joint venture between Marelli Europe S.P.A and Samvardhana Motherson. The company was established in 2014 to manufacture suspension components–such as shock absorber, strut assembly, gas lifter, damper and door balancer–for passenger and commercial vehicles in India.  

The transaction will include sale of fixed assets and inventory, and transfer of employees and business contracts, according to the exchange filing. However, the joint venture company will retain all other assets and liabilities such as debtors, creditors, cash and cash equivalents. 

The carrying value of 50% shareholding of Marelli Motherson Auto Suspension in Samvardhana Motherson’s books is Rs 46.1 crore (INR 461 million), according to the exchange filing. The Indian auto component maker’s share of the net consideration will be realised by Marelli Motherson Auto Suspension after realising value of all residual assets and discharging all liabilities. It will be lower than the carrying value of this investment in Samvardhana Motherson’s books and therefore its books will be revised accordingly, the company said. 

“Our relationship with the JV partner continues to remain strong and business as usual for other businesses i.e. lighting, HVAC (Heating, Ventilation and Air-Conditioning) and electronics,”  Samvardhana Motherson said. 

For financial year 2023-24, Marelli Motherson Auto Suspension reported a revenue of Rs 260 crore (Rs 2.60 billion). It contributed 0.3% of Samvardhana Motherson's consolidated Rs 98,691 crore (Rs 986.92 billion).

Gabriel India, the buyer of JV, is the flagship company of Anand Group with an annual revenue of approximately Rs 3,364.7 crore  (Rs 33,647 million) in FY24 and is one of the leading manufacturers of shock absorbers in India for two and three wheelers, passenger cars, commercial vehicles and aftermarket segments. As per the company's statement, with this acquisition, Gabriel India has acquired additional annual manufacturing capacity of 3.2 million shock absorbers and 1 million gas spring units. 

"This acquisition marks another milestone for Gabriel India, as it not only enhances our technological capabilities but also broadens our product portfolio and customer base. By integrating MMAS advanced suspension technologies through this acquisition, we are poised to strengthen our market position and deliver greater value to our shareholders,” said Anjali Singh, Executive Chairperson of Anand Group and Gabriel India.

Jaisal Singh, Vice Chairman of the Anand Group Executive Board, who also leads Mergers & Acquisitions for the group, said, “This strategic acquisition is one more step in Gabriel’s journey as it further strengthens its capabilities, while consistently delivering growth to its shareholders for over sixty years”.  

Update: This news article has been updated with Anand Group's comments on January 25, 14:21 IST.