Sep 27 2010
Dynetek Industries Ltd. ("Dynetek") (TSX:DNK) is pleased to announce the execution of a letter of intent to form Dynetek Cylinders India Pvt. Ltd. ("DNK India"), an Indian joint venture to be 49% owned by Dynetek and 51% owned by S.V. Energy, an Indian partnership.
Dynetek and S.V. Energy are targeting execution of certain agreements that will formalize the terms joint venture by November 30, 2010.
The partners of S.V. Energy also hold a majority interest in Ace Gas Conversions ("Ace Group"). Ace Group is a Tier One supplier of liquid propane gas and compressed natural gas components to the automotive market in India.
Dynetek has established this joint venture to maximize its penetration of the Indian market for lightweight compressed natural gas fuel storage cylinders and systems.
The joint venture will be executed in three stages.
First, Ace Group will market Dynetek's lightweight cylinders and systems on an exclusive basis in India, Pakistan, Nepal, Bangladesh and Sri Lanka. Dynetek will manufacture and provide cylinders and systems to Ace Gas as required to meet initial demand.
Second, S.V. Energy will invest in the joint venture to develop a winding and systems assembly plant near Mumbai, India. This plant is expected to be operational by the end of the second quarter of 2011. This facility will effectively replicate Dynetek's German subsidiary operations. Liners will continue to be sourced from Dynetek on an exclusive basis and shipped to DNK India for cylinder winding and final system manufacture and assembly.
Third, once sales volumes of sufficient economies of scale are achieved by DNK India, a liner production facility may be established in India.
Mr. Douglas Pigot, Executive Chairman of the Board of Dynetek commented, "The joint venture will ensure Dynetek capitalizes on and supports its first-mover advantage in certifying its Type III products and establishing relationships with large bus fleet operators in the important Indian market. Ace Group is a leader in the commercialization of compressed natural gas conversions for the automotive industry in the Indian market. We look forward to working with both S.V. Energy and Ace Group to further develop Dynetek's position in this market."
CNG (Compressed Natural Gas) Systems Applications for Buses in the Indian Market
In India, the use of natural gas vehicles and the associated infrastructure are well established. Management estimates the Indian market for lightweight cylinders will expand due to the increasing number of city gas distribution systems, a preferential natural gas pricing policy, stricter emission regulations and government funding of CNG fueled fleet additions. Management estimates buses with CNG fuelling systems will represent a growing percentage of new buses acquired.
Dynetek's Type III products are now fully certified for sale in the Indian bus OEM market and we have established relationships with major municipal and inter-city bus fleet operators.
Source: http://www.dynetek.com/