Dynamatic Technologies to set up subsidiary for requirements of Hyundai Motor India

Dynamatic Technologies Ltd has announced that the promoters of the Company represented by Mr Udayant Malhoutra, CEO & Managing Director of the Company and the promoters of Daerim, Enterprises Co Ltd. represented by Mr H K Lee, Chairman, DEC at their meeting held on September 15, 2006, have arrived at an agreement on the following:

1. DEC will set up an independent subsidiary (new company) in India for the manufacture of cylinder heads to meet the requirements of Hyundai Motor India Ltd (HMIL).

2. To avoid any conflict of interest between the new company and their existing joint venture with JDAL, the promoters of DEC and the Company reached an agreement wherein DEC's entire shareholding in JDAL i.e. 21,60,000 equity shares of Rs 10/- each constituting 27% of the total paid up share capital of JDAL would be purchased by the promoters of the Company represented by Mr Udayant Malhoutra.

3. Further to protect the interest of JDAL, DEC along with the new company has entered into a non-compete agreement with JDAL, wherein DEC has agreed not to engage itself in any business in INDIA in respect of the products currently being manufactured by JDAL, directly or through any of their subsidiaries or other ventures in which they are interested. The term of the said agreement is for four years from September 15, 2006.

4. As the separation of the joint venture partners has taken place in a cordial and amicable manner, the partners will continue to co-operate with each other in their respective ventures and this will be given effect by signing of a co-operation agreement between JDAL and the new company when it comes into existence. In the same spirit, Mr. H K Lee will continue to be a Director and the Vice-Chairman of JDAL.

5. The management of JDAL does not visualize any negative fallout in its business activities on account of this development, as DEC's new activities will be complementary and not competitive on its own.

6. As there is no change in the Company's majority holding of 73% in JDAL’s paid up capital, no financial implications arise with regard to consolidated financial statements of the company.

Further the Company has informed that JKM Dae Rim Automotive Ltd (JDAL), a joint venture company between the Company, India and Daerim Automotive Ltd (DEC), Korea with a shareholding pattern of 73:27 per cent of the Equity capital of 80,00,000 equity shares of Rs 10/- each (At present the Company holding 58,40,000 equity shares of Rs 10/- each and DEC holding 21,60,000 equity shares of Rs.10/- each).

Source : Equity Bulls

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