Johnson Controls (NYSE:JCI) has entered into a joint venture with Pricol Limited, a supplier of automotive instrument clusters in India. This venture will be called Johnson Controls Pricol Private Limited, and it will manufacture components for car and motorcycle manufacturers in India.  The venture will operate out of Pricol’s manufacturing plant in Pune.
Johnson Controls principally competes with other automotive battery manufacturers like Exide Industries (NYSE:XIDE) and Magna International (NYSE:MGA). We currently have a Trefis price estimate of $38 for Johnson Control’s Stock, around 19% above the current market price.
While Johnson Control will bring its global footprint, including its purchasing relationships and existing customer base, to the joint venture, while Pricol will leverage its manufacturing capabilities to build the business. The joint venture seeks to differentiate itself in the market by creating a unique value proposition for customers. Pricol hopes to bolster its market-leading position with this move, while Johnson Controls will get access to the motorcycle market through Pricol’s existing customer base in the segment. Johnson Controls also plans to make the Pune manufacturing site of this JV its global center for excellence.
India is one of the more important geographies for Johnson Controls. The automotive industry is expected to be one of the main beneficiaries of India’s booming middle class and urbanization. Johnson Controls will look to capitalize on this trend and increase its global market share in automotive batteries and interiors. This JV will help it procure local support to enter the motorcycle segment of the Indian automotive market. Automotive interiors is among the more important divisions of Johnson Controls, accounting for more than 25% of the stock’s value according to our estimates.Notes:
- Johnson Controls and Pricol come together for a JV Ohan, Moneycontrol, 29 March, 2012 [↩]