Action Construction Equipment Limited (ACE) announced the execution of the definitive “Investment & Shareholder Agreement” (JV Agreement) with KATO WORKS CO., LTD., Japan, on March 11, 2026. The Joint Venture aims to combine KATO’s global technology with ACE’s domestic manufacturing strength to enhance product competitiveness in India and international markets. The JV, named “ACE KATO Private Limited,” will initially see ACE holding 99% ownership, restructuring to a 50:50 split post-closing.
Execution of Definitive Joint Venture Agreement
Action Construction Equipment Limited (ACE) has formally executed the “Investment & Shareholder Agreement” (JV Agreement) with KATO WORKS CO., LTD. (KATO) of Japan. This execution follows the initial board approval intimated on February 13, 2026, marking a significant step in establishing the proposed Joint Venture.
Purpose and Strategic Rationale
The primary purpose of the JV is the synergistic combination of KATO’s global technology, design, and engineering expertise with ACE’s established manufacturing base, market reach, and operational capabilities in India. This collaboration is anticipated to boost product competitiveness by improving both performance and cost efficiency, addressing new growth opportunities both domestically and internationally.
Key Terms of the Agreement
The JV Company will be incorporated as a private limited company under the Companies Act, 2013. Key operational and structural terms include:
- Board Representation: ACE and KATO will each have the right to nominate two (2) Directors to the JV Company’s Board.
- Reserved Matters: Certain critical Board Reserved Matters require approval in the specific manner detailed within the Agreement.
- Lock-in Period: A mandatory Lock in Period of 10 Years commences from the date of Incorporation of the JVCo.
- Initial Capitalization: The initial authorized share capital is set at Rs. 10,00,000, with an initial paid-up share capital of Rs. 5,00,000, divided into equity shares of Rs. 10/- each.
Shareholding Structure Evolution
The shareholding structure will evolve through two phases:
- Prior to Closing Date: ACE shall hold 99% of the issued and paid-up share capital of the JV Company.
- Upon Closing: The shareholding will restructure so that both ACE and KATO shall each hold 50% of the issued and paid-up share capital of the JV Company.
Status of JV Entity and Related Party Matters
It is further disclosed that the proposed JV entity has already been incorporated under the name “ACE KATO Private Limited.” on March 11, 2026, with approval received from the Ministry of Corporate Affairs. Currently, there are no pre-existing Related Party Transactions between ACE and KATO. Should any future transactions arise with the JV Company, they will be conducted on an “arm’s length basis”, subject to necessary approvals from the Audit Committee and/or Board, as required.
No shareholding currently exists between ACE and KATO in their respective main entities.
Source: BSE
