Sona BLW Precision Forgings Limited (Sona Comstar) said on Wednesday that it had signed definitive agreements with Japan’s DENSO Corporation to establish two joint ventures (JV) to develop, design, manufacture and market advanced electric and hybrid powertrain systems across multiple vehicle segments.
As per the JV, Sona and DENSO have entered into a Joint Development Agreement (JDA) to develop high-efficiency liquid-cooled traction inverters, traction motors and generators for electric and hybrid passenger vehicles, commercial vehicles and other high-voltage applications. To commercialise these products, the partners will establish a joint venture to manufacture them in India.
In this joint venture, DENSO will hold 51% equity stake and assume management control, while SonaComstar will hold the remaining 49% and contribute its engineering capabilities, manufacturing expertise and established supply chain ecosystem.
Both parties will establish another JV, which will have Sona transferring its existing electric traction motor and controller business for two-wheelers and three-wheelers into its wholly owned subsidiary through a slump sale.
Subsequent to this transfer, DENSO, directly or through its affiliates, will acquire 49% equity stake in that entity at an enterprise value of Rs 1,750 crore, while Sona Comstar will retain the balance 51% and management control. This JV will engage in the business of air-cooled traction inverters, traction motors and generators and e-Axles for electric and hybrid two and three-wheelers.
Both DENSO and Sona will license intellectual property and know-how to their respective majority owned joint ventures against payment of royalty.
“This partnership will also accelerate the growth of our existing electric powertrain business for two and three-wheelers by strengthening our capabilities across the powertrain value chain and enabling us to serve a broader set of customers,” said Vivek Vikram Singh, MD and Group CEO of Sona Comstar.
Tsuneo Maebara, Head of Powertrain Systems Business Group at DENSO Corporation, said: “India, in particular, is an important region where diverse forms of mobility coexist, and electrification is advancing at significant scale...Through this partnership, we will bring together the respective strengths that both companies have built over the years to provide electrification solutions that address the diverse needs of customers in India.”
Deloitte India, Trilegal and KPMG India acted as financial, legal and diligence & tax advisors respectively to SonaComstar for this transaction.