Tokyo, March 28, 2016 – Fuji Electric Co., Ltd. (TSE:6504) (“FE”), headquartered in Tokyo, Japan, led by President Michihiro Kitazawa, is pleased to announce that it has established a joint venture with a highly successful engineering firm in India. Fuji Electric will acquire a 51% stake in the new venture, which will be established with the aim of expanding business operations in the region. The partner firm, Gemco Controls Limited (Gemco), has signed a contract with Fuji Electric under which it will continue its existing business activities. Gemco is located in the city of Faridabad in the north Indian state of Haryana.
1. Background
India is undergoing significant economic development. The country has been pushing ahead with a production-driven growth strategy under its “Make in India” policy with the aim of taking its manufacturing sector from the current 17% to 25% of GDP by 2022. At the same time, Fuji Electric is estimating that the industrial power electronics market in India (which includes industrial infrastructure as well as power electronic devices) is set to grow at 9% a year between 2016 and 2018.
Fuji Electric established Fuji Electric India, a sales and marketing subsidiary, in Mumbai in 2009. The company has been selling drive products like low voltage inverters as well as components for temperature controllers and other instrumentation devices, but the rise of companies in emerging markets has made price competition increasingly fierce in the region. Fuji Electric India is now looking to set itself apart by offering systems solutions.
2．Objectives
Fuji Electric India will continue with its current business operations while tapping into the engineering strengths of Gemco and acquiring end-user job references as a means of accessing end-user markets.
Gemco is a leading engineering firm in India and the surrounding area, with a successful track record delivering goods to steelmakers as well as companies manufacturing paper, tube, wire & cable, sugar and a variety of other materials. The company has built its engineering business by taking its in-house control panels (which are standardized and manufactured at minimal cost) and pairing them with customized software tailored to the needs of its individual customers.
Fuji Electric is in the process of constructing a low voltage inverters assembly plant in India, which is scheduled for completion in June. By tapping into Gemco’s outstanding engineering and manufacturing capabilities as well as its extensive sales and marketing channels, the company hopes jumpstart sales negotiations for systems that combine Gemco control panels and locally manufactured low voltage inverters with the medium voltage inverters, motors, instrumentation devices, monitoring and control systems, and other Fuji Electric products that have already been successful in the industrial infrastructure sector.
Going forward, Fuji Electric is looking to target metal, mining and mineral sector as well as equipment manufacturers like cranes, press processors, and more. The plan is to increase company sales in the industrial infrastructure and power electronic device business in India from its current level of JPY 3.0 billion to JPY 6.0 billion by FY2018.
3． Partner company overview
| 1) Name | : | Gemco Controls Limited |
| 2) Established | : | 1980 |
| 3) Headquarters | : | Faridabad, Haryana, Republic of India |
| 4) Representative | : | Mahesh Sachdeva |
| 5) Employees | : | 41 |
| 6) Key business activities | : | Design, manufacture of system engineering of industrial infrastructure business |
4．Capital participation
| 1) New company name | : | Fuji Gemco Private Limited |
| 2) Date of payment | : | Late June 2016 (pending final confirmation) |
| 3) Equity shares | : | Fuji Electric 51%, founder’s family 49% |
