Commercial Vehicle Group said it had formed a joint venture with Hema Engineering Industries for the production of seats and seating components for the India commercial vehicle market and for the supply of seats and components to other global CVG locations. CVG holds 90% ownership and Hema holds 10% of the joint venture.

The company will lease a production facility in the Delhi NCR (Gurgaon) region of India, where Hema has its existing manufacturing facilities. Hema will initially supply components to the joint venture.

The company has been awarded India truck seating business and expects to begin production in early to mid 2012. It will also transfer existing business to the joint venture where it will be manufactured and supplied to other global CVG locations.

CVG said tooling for some products had already been shipped to India to support its global requirements, including the development of new markets in India.

It expects to pay about $1.2m in cash to 31 December, 2012 to fund the joint venture, which includes approximately $700,000 in capital spending and approximately $500,000 in startup costs.

Startup costs in the year ended 31 December are expected to be about $200,000.  In 2012 the company expects the joint venture to contribute revenues of approximately $2m and an operating loss of about $300,000.

“Similar to our approach in China, we will transfer existing product to India and work to grow our seating business over the next several years,” said Gordon Boyd, president of CVG’s seating operations.

“In addition to the transfer of existing product, we will also be producing seats for the domestic India truck market.  We expect to grow the domestic India market much like we did in China and are currently targeting $20m to $25m million of new domestic India seating business over the next several years beyond our initial startup period of 2012.”