NYSE-listed auto component maker Dana Holding Corporation has acquired commercial vehicle axle business of its Indian joint venture Axles India Ltd for $13 million or Rs 57 crore. Axles India is a three-party joint venture between Dana, TVS group’s public-listed firm Wheels India and Sundaram Finance Group.
Wheels India scrip rose 3.55 per cent to close at Rs 239.35 at BSE on Tuesday.
Dana Corp will acquire Axle India’s axle drive head and final axle-assembly operations. The axle drive head includes the pinion, ring gear, differential lock, bearings, lube pump and yoke inside the axle housing. The Ohio-based $6.1 billion revenue firm will also be responsible for marketing, sales and engineering of medium and heavy-duty axles. Key customers of this business include Ashok Leyland and Mahindra & Mahindra. This transaction will leave Axles India with a business comprising manufacturing axle housings for Dana, besides other customers.
“This agreement further extends our capabilities and operations in another rapidly growing market,” said Mark Wallace, president of Dana’s Heavy Vehicle Products Group. “With the compound annual growth rate of India’s commercial vehicle market at 8 per cent, we have high expectations for this investment.”
Dana expects to close the transaction before end of June, subject to approvals. “Dana’s investment of $13 million in this transaction is expected to generate approximately $50 million in annual revenue,” the company said.
The transaction will expand the scope of Indian operations of Dana that broke ground last December with a new $20 million technical centre in Pune in order to support commercial vehicle customers, as well as automotive and off-highway vehicle manufacturers.
According to Dana’s website, it has seven facilities in the country located at Pant Nagar (Uttaranchal); Satara, Pune and Chakan (Maharashtra); Jodalli (Karnataka); and Cheyyar and Sriperampudur (both in southern India).
The fast-growing automotive market in India has been attracting various companies in the spectrum of automobile manufacturing to expand in the country. This includes large tyre companies (like Michelin that is in the process of setting up a greenfield manufacturing project in India and Continental that is acquiring Modi Tyres), auto component firms and automakers themselves. The commercial vehicle segment is seen as one of the most lucrative businesses as increase in sales is closely linked to economic growth.