End to End Joint Venture Execution
Challenge
A leading auto ancillary manufacturer was heavily reliant on imports for a critical component. With OEM customers pushing for localization commitments and cost down, the client evaluated a joint venture with a technology partner as the route to indigenize production.
Approach
1.JV structuring and operating model – Evaluated alternative JV structures (equity JV vs. technology licensing-only vs. phased equity build-up), assessed governance and control implications of each, and recommended a structure balancing the client’s need for operational control with the partner’s IP protection requirements.
2. Financial modeling and projections – Built a seven-year, three-statement financial model for the JVC, incorporating a phased part-localization plan (raw import → CKD assembly → full local manufacture), capacity ramp-up assumptions, working closely with client’s supply chain, production engineering and design teams. Feasibility incorporated phase wise localization plan for 18 components of BOM.
3. Investment and returns analysis – Assessed the JV investment case using IRR, payback period, ROCE and breakeven volume analysis, and stress-tested returns against key variables including input material cost (LME) and OEM offtake volume assumptions.
4. Legal agreement review – Reviewed and provided input on the JV Agreement, Technology License Agreement (TLA), Trademark Agreement, and other supporting agreements, flagging misalignments between commercial understanding and legal drafting, particularly around royalty computation, exclusivity terms, and exit/buyout clauses.
5. Implementation roadmap – Developed a phased launch plan covering entity setup, regulatory approvals, technology transfer milestones, capex and hiring plan, and go-live timelines, aligned with cross-functional stakeholders across finance, legal, HR, design, production engineering and supply chain on both sides of the JV.
Outcome
1. A board-ready business plan incorporating scenario and sensitivity analysis across volume, pricing, LME, giving management a clear view of downside risk and the conditions under which the JV would create or destroy value.
2. Identified optimal localization sequence and investment phasing, enabling the client to prioritize components with the fastest payback and lowest execution risk.
3. Commercial red-flags in the draft JV and TLA agreements were surfaced and renegotiated prior to signing, protecting the client’s economic interests in royalty.
4. A detailed, milestone-based implementation roadmap with clear ownership across cross-functional teams, which the client used to track execution post-signing.
