Hero Motors inks deal with Kiriu corporation of Japan

Delhi-based Hero Motors Ltd. (HML) announced their tie-up with Kiriu Corporation, an affiliate of Sumitomo Corporation of Japan to launch their joint venture company in India named Munjal Kiriu Industries Private Limited (MKI) to manufacture various automotive ferrous casting parts for leading automobile manufacturers in the investment country. The parent companies also changed its capital structure (HML will be reducing stake from 66.60 pc to 49 pc) and plan for expansion of its existing capacity at MKI with an estimated investments of about Rs. 160 crore in the next two years. Pankaj Munjal, Managing Director of Hero Motors Limited, said, "MKI has been operating well and growing rapidly in the Indian casting industry through excellent cooperation and ties between two partners in India and Japan since its establishment in 2007." To lead MKI towards more sustainable growth and financial stability two partners have determined to make MKI a consolidated affiliate of Kiriu by changing the percentage of shareholding from the previous 33.4 pc to 51 pc. Mr. Pankaj Munjal has been elevated to Chairman of MKI and the company has also appointed a new Managing Director of MKI, to support quick decision-making and meet customers' requirements effectively. Junichi Hashiguchi, President & Representative Director of Kiriu Corporation added, "New management team will be functional enough to gear up improving overall levels of Quality, Cost competitiveness and Delivery indicators with Kiriu's initiative and Hero's support." Hero Group is one of the largest industrial conglomerates in India and one of the most widely recognised brands having presence in cycles, automobiles, auto-ancillaries, gears transmissions, and sheet metal .The Group has wide presence with over 5000 business associates and over 25,000 employees. It has acclaimed strong brand equity over the past 25 years and has successful partnerships with the world's leading companies from Japan, Europe, Mexico and Canada. The Group has received many awards for corporate governance and is recognised as a long-term partner and an ideal employer. Hero shall stay at the management with having a 49 pc of shares to promote MKI's operations. Kiriu group has established the global manufacturing network, operating 3 domestic plants in Japan and 7 overseas sites in China, Thailand, Indonesia, Korea, USA, Mexico and India. Mr. Hashiguchi commented "All facilities are operated under the one single philosophy of the Kiriu Production Way, i.e. "Ikki-Seisan", which is translated as the total integrated manufacturing process, once starting manufacturing, finalizing products at full stretch as much lean process as possible. Kiriu sets a goal to be a "World-leading brake disc and drum supplier" by providing comprehensive services and total technical solution that delivered from the "IKKI-SEISAN" philosophy" Both Kiriu and Hero agreed to exercise utmost efforts by mutual collaboration to support MKI to grow as the top supplier for automotive ferrous casting parts representing brake disc and brake drum as well as the ductile iron parts in India. To challenge this target, MKI will install another new casting line in the current Manesar plant, by the latter half of 2012 to ramp up production, in response to the rapidly increasing demand of the Indian automotive industry. This capacity expansion will further strengthen MKI's strong customer base in the Southern & Northern regions of the country to support future growth of the organization. BMR Advisors acted as sole financial and transaction advisors to Sumitomo and Kiriu for this deal.