Sona BLW Precision Forgings Share price and Fundamental Analysis

Company History

Sona BLW Precision Forgings Limited (SBPF) was incorporated in 1995 as Sona Okegawa Precision Forgings Limited, began commercial production in November 1998. In 2013, the Company was renamed Sona BLW Precision Forgings Limited.The Company is engaged in the manufacturing of precision forged bevel gears and differential case assemblies, conventional and micro-hybrid starter motors, EV traction motors etc., for automotive and other applications. The Company has 9 manufacturing and assembly plants across India, China, Mexico and USA, of which six are located in India. The Company's manufacturing and assembly plants are located at Gurugram, Manesar, Pune, Chennai, Hangzhou, Mexico, Tecumseh.

During the FY 2018, the company made investment of Rs 116.39 million in equity shares of Sona Holding BV,Netherlands, being wholly owned subsidiary of Company.

The Company had on 16th of October, 2018, inter-alia, executed the following agreements, 1. Share Purchase and Share Subscription Agreement (SSPA) with JM Financial Trustee Company Pvt. Ltd. (JM), Sona Autocomp Holding Pvt. Ltd. (SAHPL), Mr. Sunjay Kapur and BCP Topco VI Pte. Ltd. (BCP Topco) to record the terms and conditions of the investment by BCP Topco in the Company and sale of the equity stake held by JM in the Company to BCP Topco,2. Share Purchase and Shareholders agreement (Europe Separation Agreement or ESA) with Sona Holding B.V., Mr. Sunjay Kapur and SAHPL to record the terms and conditions in relation to the transfer of 81% of the equity shares and redeemable preference shares of Sona Holding BV from the Company to SAHPL,3. Share Purchase Agreement (Comstar SPA) with Comstar Automotive Technologies Pvt. Ltd., Comstar Automotive Hong Kong Limited (jointly the Comstar entities) and Singapore VII Topco III Pte. Ltd. (Singapore Topco) to record the terms and conditions in relation to the acquisition of 100% shareholding in Comstar Entities by the Company from Singapore Topco,4. Shareholders agreement with SAHPL, BCP Topco and Mr. Sunjay Kapur.

Further BCP Topco has executed an Assignment Agreement with Singapore VII Topco III Pte Ltd (Investor) on 14th February, 2019 whereby BCP Topco has assigned all its rights and obligations under all the Transaction Documents in favour of the Investor. Accordingly, the name of the BCP Topco, wherever appearing in the Transaction Documents, shall be read as the Singapore VII Topco III Pte. Ltd.

Pursuant to the terms of the ESA and the approval of the Board of Directors and the shareholders in their meetings held on 3rd of July, 2019, the Company had on 4th of July, 2019, disposed off (a) 40,727 (Forty Thousand and Seven Hundred and Twenty Seven) Equity Shares, representing 81% (eighty one percent) of the Equity Shares on a Fully Diluted Basis, and (b) 1,673,918 (One Million Six Hundred Seventy Three Thousand Nine Hundred and Eighteen) Redeemable Preference Shares (RPS), representing 81% (eighty one percent) of issued and outstanding RPS of Sona Holding B.V. (Sona BV Shares),to Sona Autocomp Holding Pvt Ltd( SAHPL).

The sale of SHBV shares by the Company to SAHPL was carried out at a total consideration of Rs.139,95,01,058/- (Rupees One Billion Three Hundred Ninety Nine Million, Five Hundred and One Thousand Fifty Eight only) (as per the valuation report obtained from the Finshore Management Services Ltd., a Category 1 SEBI Registered Merchant Banker.), which is equivalent to 81% of the investment made by the Company in the Sona BV Share (net of write off of investment on account of investment in Sona BLW Precision Forge Inc. USA).

The Reserve Bank of India has vide its letter dated 28th June, 2019, approved write off of investment equivalent to Euro 6.9 million made by the Company in the shares of Sona BLW Precision Forge Inc., USA thru Sona Holding BV, Netherlands. Consequent to above transaction, currently, the Company is holding 19% shareholding in Sona Holding BV, Netherlands.

Pursuant to the terms of the SSPA and the approval of the Board and the shareholders in their meetings held on 5th of July, 2019, the Company had made an allotment of equity Shares and compulsorily convertible preference shares for a total amount of INR 8,706,060,078.77.

With an intent to give effect to the proposed re-structuring and to provide an exit route to the shareholders, the Company with the approval of the Board of Directors and the shareholders in their meeting held on 5th July, 2019, approved buy-back of 2,592,935 fully paid up equity shares having face value of Rs. 10/- each (representing 9.35457% of the paidup equity share capital of the Company as per the previous Audited financial statements as of 31st March, 2018), from the existing equity shareholders on a proportionate basis, for a total consideration of INR 814,210,008.57/- at Rs. 314.01096 per equity share.

Pursuant to terms of the Comstar SPA and the approval of the Board and the shareholders in their meetings held on 5th July, 2019 the Company on 5th July, 2019 had acquired 100% equity shares of Comstar Automotive Technologies Pvt. Ltd. (Comstar India) and Comstar Automotive Hong Kong Limited (Comstar HK), Comstar entities from Singapore VII Topco III Pte. Ltd., Singapore.

Pursuant to the approval of the Board of Directors in their meeting held on 13th February, 2019 and the shareholders in their meeting held on 16th February, 2019, the Company had on 28th March, 2019, executed the following agreements: 1. German Brand Ownership Agreement with SAHPL, Sona BLW Germany and Mr. Sunjay Kapur to record the terms and conditions in relation to transfer / assignment of Sona Germany IP owned by Sona BLW Germany to the Company at a consideration of EUR 225,000/-,2. Brand Ownership Agreement with Sona Management Services Ltd. (SMSL), SAHPL, Sona Skill Development Centre Limited and Mr. Sunjay Kapur to record the terms and conditions in relation to the transfer / assignment of all the intellectual property rights owned by Sona Management Services Limited to the Company (at a total consideration of INR 650 Million) followed by licensing of such rights by the Company to the Sona Autocomp Holding Private Limited and others.

During the FY2020,the company sold 81% stake in its whollyowned subsidiary,Sona Holding BV,Netherlands,to Sona Autocomp Pvt Ltd,for a sale consideration of Rs 1399.48 million.

During the year, the company had acquired 100% stake in Comstar Automotive Technologies Pvt Ltd and Comstar Automotive Hong Kong Ltd from Singapore VII Topco III Pte. Ltd.

The equity shares of the Company have been listed on the BSE Limited and the National Stock Exchange of India Limited on 24th June 2021.

During the year 2022, Company launched next generation of motors and controllers with high efficiency, torque and power density, including the introduction of its maiden motor T-REF.

A Scheme of Amalgamation between the Company and Comstar Automotive Technologies Private Limited, a wholly-owned subsidiary, became effective from 28th January, 2022. Consequent to merger of Comstar Automotive Technologies Private Limited, an erstwhile wholly-owned subsidiary with Company, Comstar ceases to be the wholly-owned subsidiary of the Company and the 2 subsidiaries of Comstar i.e Comstar Automotive USA LLC and Comstar Automotive Technology Services Private Limited, became the Direct Subsidiary of the Company.

During the year 2022-23, Company opened its new facility at Chakan, Pune. It launched three new product lines: electronically locking differential assembly or EDL for the high-end electric SUV for the North American market, precision-formed Input Rotor Shaft and Intermediate Gears, and Net-Shaped Spiral Bevel Gears. It acquired 54% stake in Novelic effective on on January 9, 2023.