NEW ALBANY, Ohio, Sept. 6, 2011 /PRNewswire-Asia/ -- Commercial Vehicle Group, Inc. (Nasdaq: CVGI) announced today that it has entered into a joint venture (the "Joint Venture") with Hema Engineering Industries Limited ("Hema") for the production of seats and seating components for the India commercial vehicle market and for the supply of seats and components to other global CVG locations. CVG holds a 90% ownership and Hema holds a 10% ownership in the Joint Venture.
The Company will lease a production facility in the Delhi NCR (Gurgaon) region of India, where Hema has its existing manufacturing facilities. Hema will initially supply components to the Joint Venture. The Company has been awarded India truck seating business and expects to begin production of this business in early to mid 2012. The Company will also transfer existing business to the Joint Venture where it will be manufactured and supplied to other global CVG locations. The Company stated that tooling for certain of its products has already been shipped to India to support its global requirements, including the development of new markets in India.
The Company expects to contribute approximately $1.2 million in cash through December 31, 2012 to fund the Joint Venture, which includes approximately $0.7 million in capital spending and approximately $0.5 million of startup costs.
For the year ended December 31, 2011, the Company expects startup costs of approximately $200 thousand. For the year ended December 31, 2012, the Company expects the Joint Venture to contribute revenues of approximately $2.0 million and operating loss of approximately $300 thousand.
"Similar to our approach in China, we will transfer existing product to India and work to grow our seating business over the next several years," said W. Gordon Boyd, President of Commercial Vehicle Group's Seating Operations. "In addition to the transfer of existing product, we will also be producing seats for the domestic India truck market. We expect to grow the domestic India market much like we did in China and are currently targeting $20 to $25 million of new domestic India seating business over the next several years beyond our initial startup period of 2012," added Mr. Boyd.
"We are extremely excited about the Joint Venture with Hema Engineering," said Mervin Dunn, President and Chief Executive Officer of Commercial Vehicle Group. "Hema is an excellent choice as a partner given their engineering and manufacturing presence in India, as well as their strong network of customers and suppliers and we believe India represents significant opportunities for growth, similar to what we experienced in China and we are eager to move forward with the Joint Venture," added Mr. Dunn.
"Hema Engineering is very pleased with its partnership with Commercial Vehicle Group," said Chandresh Jajoo, Hema's Managing Director. "We look forward to building a strong business together by combining CVG's products and reputation in the global market with Hema's capabilities and reputation in the India market," added Mr. Jajoo.
About Commercial Vehicle Group, Inc.
Commercial Vehicle Group is a leading supplier of fully integrated system solutions for the global commercial vehicle market, including the heavy-duty truck market, the construction and agriculture markets and the specialty and military transportation markets. The Company's products include static and suspension seat systems, electronic wire harness assemblies, controls and switches, structures and components, interior trim systems (including instrument panels, door panels, headliners, cabinetry and floor systems), mirrors and wiper systems specifically designed for applications in commercial vehicles. The Company is headquartered in New Albany, OH with operations throughout North America, Europe and Asia. Information about the Company and its products is available on the internet at www.cvgrp.com.
About Hema Engineering Industries Limited:
Hema Group of Industries was established in 1984 and is a leading Original Equipment Manufacturer catering to the need of two-wheeler and four-wheeler Automobiles Industries in India. Hema Group specializes in the field of engineering design, production of sheet metal & tubular fabricated components and various types of surface treatment solutions such as electro plating, powder coating, liquid painting and heat resistance painting. Hema Group has a state-of-the-art design centre in Pune and manufacturing facilities located in Gurgaon, Manesar, Dharuhera, Bawal, Haridwar, Hosur (Near Bangalore) regions of India. Information about the Company is available on the internet at www.hemaengineering.com.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. These statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," or similar expressions. In particular, this press release may contain forward-looking statements about Company expectations for future periods with respect to facility production dates, capital spending and startup costs associated with funding the Joint Venture, new business opportunities, or other financial information. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perspective on historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including but not limited to: (i) general economic or business conditions affecting the markets in which the Company serves; (ii) the Company's ability to develop or successfully introduce new products; (iii) risks associated with conducting business in foreign countries and currencies; (iv) increased competition in the heavy-duty truck market; (v) our failure to complete or successfully integrate additional strategic acquisitions; (vi) the impact of changes in governmental regulations on the Company's customers or on its business; (vii) the loss of business from a major customer or the discontinuation of particular commercial vehicle platforms; (viii) raw material price increases and periodic delays in delivery; (ix) the Company's ability to obtain future financing due to changes in the lending markets or its financial position; (x) the Company's ability to comply with the financial covenants in our revolving credit facility; and (xi) various other risks as outlined under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for fiscal year ending December 31, 2010 and under the heading "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011. There can be no assurance that statements made in this press release relating to future events will be achieved. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by such cautionary statements.
