The board of directors, Nishat Mills have decided to enter into a shareholder agreement with Sojitz Corporation of Japan (Sojitz) for an acquisition of 40pc stake in the company’s wholly owned subsidiary Hyundai Nishat Motor (Private) Limited (HNMPL). This was notified in a notice sent to the Pakistan Stock Exchange.
Sojitz will be an equity sharing agreement with HNMPL via an investment of Rs 40m. The agreement is subject to the grant of regulatory approvals. Moreover, HNMPL also announced conducting a feasibility analysis of setting up a greenfield project to establish an assembly and sales unit for passenger and 1-ton commercial vehicles in Pakistan.
Moreover, it was notified that all future investments by the two companies are likely to be based on results of the feasibility analysis.
Earlier this year, Nishat Mills, a subsidiary of Nishat Group had announced venturing with the South Korean Hyundai to set up an assembly plant in the country. The agreement was significant in the sense that it marked the return of Hyundai to Pakistan’s automobile industry in addition to being a strong move to break the monopoly of Japanese companies dominating Pakistan’s automobile industry by assembling cars in Pakistan in collaboration with local partners.
The announcement has come at a time when the government has rejected amendments to the Auto Policy 2016, not conceding to the demands of existing players in the auto industry to allow incentives to them. Moreover, the government rejected Pak Suzuki’s demands stating the company’s investment plans did not fall under the greenfield or the brownfield category and that the incentives would not be extended to existing players in the industry. The board of investment (BOI) also rejected Audi’s assembly only plans in the country asking the company to prepare a fresh proposal to be presented to the board.
Nishat Mills stock is currently trading at Rs 165.51 down by Rs0.88 (0.53pc).