TVS Group company Wheels India Ltd (WIL) and Japan-based Topy Industries have grown their technical agreement for passenger car steel wheel business into a 74:26 joint venture.

Under the new pact, Topy will pick up 26 per cent stake in WIL Car Wheels Ltd (WCWL), a wholly-owned subsidiary of WIL.

The Japanese company will invest ₹80-90 crore with WIL’s factories in Padi (Chennai) and Bawal (Haryana) transferred to WIL Car Wheels Ltd. The combined capacity of the two factories is about 6.5 million wheels a year.

The investment will be made through new issue of equity shares by WCWL to Topy, subject to regulatory approvals. The transaction is expected to be completed by the end of next quarter. The initial equity capital of WCWL is expected to be ₹4 crore.

“The management of WIL Care Wheels will have WIL-designated people, while Topy will have a representative in the board,” said Srivats Ram, Managing Director, Wheels India.

Global footprint

By transferring the passenger car wheel business into a separate subsidiary, there will be free flow of technology from Topy, with which WIL entered into technical pact in 2011 for passenger car steel wheel business.

Also, Topy is looking at a global footprint due to its customer requirements. It sees WIL as a strong partner to tap the opportunities both in India and in the newer markets.

WIL’s passenger car steel wheels business reported revenues of ₹224 crore in 2016-17. On a consolidated basis, this business accounted for about 10.3 of the total topline WIL.

New plant in Gujarat

The JV WIL Car Wheels Ltd will set up a new unit in Gujarat, where Maruti, Ford and Tata are likely to be its key customers. The new factory is expected to come up at Vanod by next year at an investment of ₹50 crore.

Presently, WIL Car Wheels has a market share of 45 per cent in the domestic passenger car steel wheel market, which has both steel and aluminium wheels in the ratio of 73 :27.

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