Minda Industries raising stake in subsidiary firm Minda Kosei Aluminum Wheels to 77.35%

Industry:    3 months ago

Minda Industries Ltd (MIL), the flagship firm of the UNO MINDA Group, said it is increasing its stake in the subsidiary company Minda Kosei Aluminum Wheels (MKA) to 77.35 per cent from 70 per cent, with an investment of Rs 61.2 crore in the venture. The existing shareholders and Joint venture partners have renounced their rights in favour of MIL, enabling the company to increase its stake from 70 per cent to 77.35 per cent in Minda Kosei, the company said in a statement.

Minda Industries Ltd said it is consolidating its stake in four partnership firms by acquiring the remaining stake of promoters.

A 70:30 joint venture company between Minda Group and Kosei International Trade and Investment Company, Japan (Kosei Japan), Minda Kosei is into the development, manufacturing and sales of aluminium alloy wheels for major car OEMs (original equipment manufacturers) and aftermarket in India.

The board of Minda Industries Ltd has approved a further investment of Rs 61.2 crore in Minda Kosei by way of subscribing to a rights issue at a face value of Rs 10 per share, the company said.

“Over the years, we have noticed a surge in demand for premium products by OEMs in the Indian market. While penetration of alloy wheels is also increasing, it still remains low in comparison to developed countries providing ample growth opportunities.

“Our additional investment in Minda Kosei will help us further capitalise on this opportunity,” Sunil Bohra, group chief financial officer of UNO MINDA Group, said.

Minda Kosei has significant growth opportunities with increasing penetration of 4W alloy wheels, it said.

The company added that Minda Industries Ltd will invest around Rs 17.49 crore to acquire the remaining stake of promoters in four partnership firms, namely Samaria Engineering, SM Auto Industries, YA Auto Industries and auto components.

This is in line with the group’s vision and efforts towards consolidation, it said.

“UNO MINDA Group is focused on consistently enhancing value for its stakeholders. The strengthening of its stake in Minda Kosei and consolidation of partnership firms are steps towards this commitment.

“The consolidation of group companies/ firms over the years has transformed us into a unique cohesive unit with considerable financial strength growing as a unified force,” Nirmal K Minda, chairman and managing director of UNO MINDA Group.

The group had initiated a consolidation exercise five years ago. As part of this, stakes owned by promoters under UNO Minda group in various entities were transferred to Minda Industries Ltd, according to the company.

All group companies were transferred to Minda Industries Ltd in the past few years, the statement added.

There were four partnership firms where promoters held some stake along with third-party, it added.

In the past one year, the company has announced expansion at both the Minda Kosei’s Bawal (Rajasthan) and Gujarat plants to enhance its total capacity from 2,10,000 wheels per month to 3,30,000 wheels per month by 2023-24.

The company said it is now consolidating its stake in these partnership firms by acquiring the remaining stake of promoters, effective from Jan 1, 2022.

The move will further simplify the holding structure and improve transparency with a significant reduction of related-party transactions, it said.

The firm added that this concludes the company’s consolidation exercise with all group companies, with all auto components businesses now being brought under-listed entity, barring the joint venture with Nabtesco which the Group is planning to exit in near future.