Komatsu to exit joint venture L&T Komatsu

13 Apr 2013

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Japanese mining equipment maker Komatsu is exiting its equal joint venture with Larsen & Toubro Ltd, by selling the 50 per cent it owns in L&T Komatsu to the Indian partner.

Larsen & Toubro today announced that it would acquire 50 per cent stake in L&T-Komatsu Limited (LTK) held by Komatsu Asia & Pacific Pte Ltd, a wholly owned subsidiary of Komatsu Ltd. (Komatsu), Japan.

In a submission to the Competition Commission of India (CCI), L&T said Komatsu would continue to meet the Indian market requirements till the Japanese company sets up its own manufacturing units in the country and that both companies could also enter into certain transition arrangements under which L&T Komatsu or its successor would provide contract manufacturing services to Komatsu India for 3-4 years.

The buy-out will make LTK a wholly owned subsidiary of L&T with 100 per cent shareholding.

LTK will continue to manufacture construction equipment and hydraulic components. Komatsu will be responsible for the production of Komatsu equipment, including hydraulic excavators, L&T said in a release today.

Komatsu Asia Pacific is the Singapore-based construction and mining equipment unit of Komatsu.

The CCI has cleared L&T's proposed buyout of 50 per cent stake held by Japanese giant Komatsu in their joint venture.

After looking into the application seeking CCI approval for the deal, the fair trade regulator said in its order, ''the proposed combination is not likely to have an appreciable adverse effect on competition in India ...the Commission hereby approves the proposed combination.''

Following buyout, L&T would return the technology licensed to L&T Komatsu to Komatsu.

The companies said the transaction would still enable LTK to provide premium products and services to customers, and maintain leadership position in construction & mining equipment business in the country, offering state-of-the art machines with highest level of quality and latest designs from Komatsu.

L&T will continue to be responsible for marketing, sales and product support in India for the Komatsu range of products.

L&T Komatsu, which is engaged in the business of manufacturing hydraulic excavators used in the construction and mining sectors, had 23 per cent of the total hydraulic excavators sold in India in fiscal 2011-12, as per details submitted to the CCI.

L&T Komatsu manufactured most of the hydraulic excavators using the Komatsu technology and only a few using its own technology. L&T was only providing marketing and after sales services for the products, CCI observed.

''L&T did not manufacture hydraulic excavators except through L&T Komatsu, the exit of Komatsu from L&T Komatsu, consequent to the proposed combination, is not likely to raise any competition concern,'' CCI added.

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