Rationale

 The rating assigned for Uno Minda Buehler Motor Private Limited’s (UMBPL) bank facilities factors in its strong parentage as it is 50.1:49.9 joint venture (JV) between Uno Minda Limited (UML, rated [ICRA]AA+ (Stable)/A1+) and Buehler Motor GmbH (Buehler). Uno Minda Group has an established market position within the automotive component industry in India and has a diversified business profile with presence across automotive and product segments. The Group has entered multiple JVs over the years across the automotive components product portfolio for enhancing its product offerings. To enhance the Group’s product offerings for the emerging electric two-wheeler (e2W) industry in India, UML entered a JV with Buehler and established UMBPL for assembly and supply of traction motors for e2Ws. Buehler is a supplier of customised mechatronic drive solutions based out of Germany and has a legacy of 168 years in the traction motor industry. The JV is expected to benefit from access to technological support from Buehler and the established market position of the Uno Minda Group in the automotive industry. UML and Buehler have supported UMBPL through infusion of equity share capital in equal proportion (~Rs. 23.7 crore infused till date) and are expected to continue to support the entity in meeting its funding requirements, going forward. The company has established a traction motor assembly plant in Bawal, Haryana with a hub motor assembly line as on date. The company inaugurated its plant in August 2023 and has already executed research and development (R&D) projects with established twowheeler manufacturers. However, UMBPL is yet to start commercial production, with supplies expected to commence over the next 6-9 months. ICRA notes that the company is in discussion with multiple established e2W players in India for the supply of hub motors and is also in discussion with legacy players entering the e2W market for the supply of mid drive motors. It has plans to set up a mid-drive motor line in the next few months, which is expected to be funded by term debt and existing cash reserves. Even though the company is yet to commence production, favourable outlook for the EV industry, supported by Government policies, is likely to aid the growth prospects of UMBPL over the medium term. The company, however, is likely to remain exposed to competition from established players in the e2W traction motor industry, which could constrain its pricing power and delay ramp-up in scale of operations. Additionally, the company remains exposed to high product concentration risk as UMBPL’s presence is limited to only traction motors at present. The Stable outlook on UMBPL’s rating reflects ICRA’s opinion that the company will continue to benefit from its strong parentage, which will provide adequate operational and financial support to the company, and aid in stabilisation of operations.