Minda Corp, a part of Ashok Minda’s Spark Minda Group, on Tuesday bought partner Stoneridge’s 49% stake in Minda-Stoneridge joint venture to take full control of the automotive instrument cluster and sensors business. The company is also actively scouting for acquisitions in the sensors and electronics space to increase its product offerings.
The company is aiming to grow 10 percentage points faster than the market and the intent is to build capabilities through organic and inorganic ways to attain the target, group chairman Ashok Minda told ET.
“Our technical collaboration with Stoneridge continues — or rather we have expanded our technical scope. However, after the stake buy, there is a flexibility for us to go in for newer collaboration to access technological products and offer a wider product to customers,” said Minda.
The group has already entered into a joint venture in 2021 with a South Korean company, Infac, in the auto electronic space of antennas. It has also formed an alliance with Israeli company Ride Vision to offer collision-avoidance technology.
The Spark Minda Group is evolving itself to keep pace with the fast-transforming automotive industry that focuses on electrification and connectivity. The company is mapping the consumer trends and government regulations closely and will be looking at adding more technology-led products to its offerings.
Minda said the role of sensors in the vehicle is only going to grow in the future and the group is looking at inorganic opportunities or technical collaboration in this technology.
On the rationale behind the complete takeover of the Stoneridge JV, Minda said the acquisition will be value-accretive for shareholders as financial performance of the group will strengthen and the company will have perpetual ownership of all existing technology licences granted by Stoneridge.
US-based Stoneridge is helping the Indian company in localisation of exhaust gas temperature gauge sensors, which have become compulsory in all diesel vehicles after the transition to BS-VI emission standards. The usage of these will increase once the onboard diagnostics-II norms kick in from April 2023.
The company said the deal will improve the operating profit (Ebitda) margin and also the return on capital employed. Based on the financials of FY21,
is trading at an enterprise value/Ebitda of more than 15, whereas the deal at which it acquired the remaining stake in the JV is less than 6. This creates value to the shareholders from day 1 as it adds to earnings per share as well.
The acquisition of the 49% stake was done at an enterprise value of Rs 240 crore.
The 100% ownership in the company would add around Rs 400 crore to revenue in the consolidated financials. The financial performance of the JV only reflected in the minority interest component of the company.
The JV had around Rs 80 crore cash on the book, therefore Minda Corp will fork out around Rs 70-80 crore to buy the remaining 49% stake from Stoneridge. Of the total amount, nearly half would be from funds raised through a qualified institution placement of shares by Minda Corporation. Stoneridge has made a return of around 10 times its investment in the JV — it had invested around $2 million 15 years ago and exited at around $20 million.
