ANG Auto has entered into a definitive agreement with US-based Carl Stover to form joint venture companies in USA and India.According to an official release issued by the company to the BSE today, under the agreement, it will hold 70% equity in American JV to be named ANG Stover Industries. This will give it access to front-end manufacturing operations for existing as well as new customers.A new subsidiary company ANG Stover Industries will also be set up in India, which will have 70% shareholding from it and the balance from Carl Stover and his nominees/strategic investors. The joint venture company shall leverage the low cost manufacturing base of this joint venture from India. The company will transfer its existing manufacturing facility at Noida, SEZ (which was commissioned in September, 2006) to the joint venture company.The US JV shall acquire the running of the business of auto component manufacturing at West Virginia plant, USA from Stover Industries. This facility is located on a 5 acre plot with covered area of 30,000 sqft with in-house engineering, machining, fabrication, assembling and welding capability with current sales of about $7 million.This acquisition pegs the enterprise value of Stover Industries Inc. at $7.7 million and will entail a cash outflow of approximately $2.90 million from ANG Auto.The US 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 firms is expected to be in the region of $15 million to $18 million (Rs 67 crore to Rs 80 crore) in the first year of operations with sales projected to reach $45 million (Rs 200 crore) in the third year of operation.Further the JV firm is planning a capex of $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.
