ANG Auto signs pact with Carl Stover to form JVs in USA, India

Mumbai, Dec 12 (UNI) ANG Auto Ltd has entered into a definitive agreement with Carl Stover to form joint venture companies in USA and India.

Under the agreement, the joint venture companies in USA shall acquire the running profitable business of manufacturing of auto components at West Virginia plant, USA from Stover Industries Inc, said ANG Auto in a statement issued to BSE today.

The facility is located on a 5-acre plot with covered area of 30,000 sq ft with in-house engineering, machining, fabrication, assembling and weilding capability with current sales of around USD 7 million.

The acquisition values the Enterprise Value of Stover Industries Inc at USD 7.7 million and will entail a cash outflow of roughly USD 2.90 million from the company.

The joint venture company in USA will be named as ANG Stover Industries LLC and the company will hold 70 per cent equity. This will give the company access to front-end manufacturing operations for existing as well as new customers.

A new subsidiary company ANG Stover Industries Pvt Ltd will also be set up in India, which will have 70 per cent shareholding from the company and balance from Carl Stover and his nominees/strategic investors.

The JV company shall leverage the low-cost manufacturing base of the Joint Venture from India. It will transfer its existing manufacturing facility at Noida SEZ, which was commissioned in September to the JV company.

The JV hopes to ramp up supplies to its existing and new customers, providing the customers with low-cost proposition along with a front-end local manufacturing base in USA. Projected turnover in the new JV companies is expected to be in the region of USD 15 million to USD 18 million (Rs 67 crore to Rs 80 crore) in the First Year of operations with sales projected to reach USD 45 million (Rs 200 crore approximately) in the third year of operation.

Further, the JV company is planning a Capex of around USD 10 million in the next 1.5 years for increasing the machining/forging capacity. ANG expects the margins from the new venture to be in line with the margins currently enjoyed by it.

UNI SN SSS SKB1720