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Larsen and Toubro Ltd (L&T) on Friday bought out its Japanese partner Komatsu’s 50 per cent stake in a joint venture that manufactures construction equipment and hydraulic components. The financial details of the transaction were not revealed, but an official said the amount was “not significant”.
After the acquisition, L&T Komatsu (LTK) will become a wholly-owned subsidiary of L&T. “Komatsu plans to consolidate its manufacturing operations under the parent brand, in line with its global strategy. This transaction is part of that process,” L&T said in a statement. Komatsu held its stake in the joint venture through its wholly-owned Singaporean subsidiary, Komatsu Asia and Pacific.
L&T said LTK would continue to manufacture construction equipment and hydraulic components. “Komatsu will be responsible for the production of Komatsu equipment, including hydraulic excavators. L&T will continue to be responsible for marketing, sales and product support in India for the Komatsu range of products, assuring support to customers,” L&T said.
L&T also has a marketing alliance with Komatsu. Komatsu will retain its own manufacturing facilities of some of the equipment, and these products will continue to be marketed by L&T.
The transaction got approval from the Competition Commission of India (CCI) late evening on Friday. The deal required a nod from the fair trade regulator as hydraulic excavators, manufactured by the JV, supply to a significant 20 per cent of the market. CCI gave a go-ahead as it observed this might not have an appreciable adverse effect on competition in India. L&T approached CCI for an approval of this share purchase last month.
“As a result of this transaction, the companies expect to be able to provide premium products and services to customers, and maintain leadership position in construction and mining equipment business, offering state-of-the art machines with highest level of quality and latest designs from Komatsu,” L&T said in a release.
Komatsu is a 92-year-old company which specialises in industrial products and services.
It also engages in businesses like vehicles, logistics, and electronics.
