SAMIL (formerly Motherson Sumi Systems) has signed a strategic agreement to acquire assets of frame manufacturing and assembly operations from Daimler India Commercial Vehicles (DICV) operated out of its facilities in Chennai at book value.
The frame assembly operations are managed by DICV itself in a separate facility. Once the transaction is completed, SAMIL will own the assets (including long term leasehold rights for land) and will run end to end operations for frame manufacturing and assembly and supply to DICV under the long-term supply contract.
The company says based on the volumes produced by DICV in fiscal 2021-22 and the terms of the supply agreement, the revenue generated (by the assets being bought), would have been approximately Rs 300 crore.
As part of the transaction SAMIL has also signed a long-term agreement with DICV to supply the complete frame assembly.
The transaction will be an extension of SAMIL’s existing business of body in white (BIW) and cold stamped products manufactured for Daimler India Commercial in Chennai. It also presents a unique vertical integration opportunity to the component supplier by addition of certain key assets and machinery and thereby significantly increasing the content per vehicle.
With the purchase of these assets, SAMIL’s status will change from contract manufacturer to the principal manufacturer of long-members for the Frame Assembly business.
Post the transaction, SAMIL will become the sole supplier of Frame Assembly to DICV for 10 years.
The Tier 1 supplier says it is also open to avenues of similar business model with other OEMs in India.