Japan’s JTEKT Corporation is acquiring additional 51.12 per cent stake for around Rs 853 crore in Sona Koyo Steering Systems Ltd (SKSSL). The transaction is expected to close by the first quarter of FY 2017–18.

JTEKT Corporation: (acquirer) (JTEKT)

  • JTEKT is a limited liability listed company under the laws of Japan.
  • JTEKT is listed on the Nagoya Stock Exchange and Tokyo Stock Exchange in Japan. The American Depository Receipts of the acquirer are traded on Over the Counter (OTC) Exchange in the United States.
  • The company focuses on four major product technologies: bearings, steering systems, driveline components and machine tools.
  • JTEKT has its set up and manufacturing plants in Japan and other countries like the US, China, Thailand and Brazil. It has also started doing investments in India and France.

Sona Koyo Steering Systems Limited: (target company) (SKSSL)

  • SKSSL is a public company incorporated on June 14, 1984,
  • SKSSL is a manufacturer of steering systems in the passenger car and utility vehicle market in India, catering to passenger cars, utility vehicles and light commercial vehicles.
  • SKSSL has operations across India through its 7 plants (2 plants in Gurgaon, 3 plants in Dharuhera, 1 plant in Chennai and 1 in Sanand).
  • The product portfolio of the company includes high performance rack and pinion manual steering gear, hydraulic power steering system, recirculating ball screw assembly, column type electric power steering for passenger vehicle, tilt & telescopic steering column, intermediate shaft, advanced column & telescopic Intermediate shaft for commercial vehicles, electric power assist module (EPAM) for off highway and farm sector, rear axle assy and driveline products.
  • The customers of the SKSSL include major vehicle manufactures in India and outside India also.
  • It supplies steering assemblies to Maruti Suzuki and several global automakers, including Toyota, Tata Motors, Mahindra & Mahindra, Honda, Renault Nissan and Ford.
  • The equity shares of the SKSSL are listed on the BSE and NSE Stock Exchanges and are frequently traded in terms of regulation 2(1)(j) of the SEBI (SAST) Regulations.

Business Relationship between JTEKT and SKSSL

  • Pre-transaction, acquirer holds 20.10% of total shareholding of the target company.
  • JTEKT has a joint venture, JSAI (JTEKT Sona Automotive India Limited) with the SKSSL wherein the acquirer holds 51% stake with a business objective of manufacturing column type electric power steering (C-EPS) systems.
  • JTEKT has several technology license/sharing arrangements with SKSSL in the past and the JTEKT continues to have technology license/sharing arrangements with SKSSL
  • JTEKT and its group entities export or supply certain parts/raw material to the SKSSL and its subsidiaries.

TRANSACTION

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