Japan's Daifuku buys 100% stake in Vega Automation for undisclosed sum

Vega's MD and promoter will continue to head the company as part of the deal under which a part of the purchase price is based on the performance of the business post acquisition

Japanese material handling equipment supplier Daifuku Co., Limited has acquired Hyderabad-based warehouse automation company Vega Conveyors and Automation for an undisclosed sum. 

Vega will become a 100 percent subsidiary of Daifuku post acquisition even though its managing director Srinivas Garimella, who is the promoter, will continue to head the company as part of the deal that includes an earn-out package. Earn-out is a pricing structure where a part of the purchase price is based on the performance of the business following the acquisition, which comes in the backdrop of a booming warehousing infrastructure development in India.

Vega Conveyors, which operates a factory in Hyderabad and a design and development center in Pune, has several big corporate names on its client list, including Amazon, Flipkart, Hindustan Unilever among others. It has done a business of around Rs 60 crore last year, according to sources.

Daifuku established its Mumbai sales office in 2016 for their factory and distribution automation (FA&DA) division of its Indian subsidiary, Daifuku Indian Private Limited. As the products must be manufactured and shipped from Japan to its Indian customers directly, Daifuku found a suitable target in Vega for business expansion and manufacturing foot print in India.

Following the acquisition Daifuku would setup the entire FA&DA manufacturing operations, involving a much bigger factory at Vega's present manufacturing facility in Telangana, according to Srinivas.

"Consolidating our expertise and capabilities with Vega will allow for the expansion of our manufacturing and distribution business segments within Asia," said Daifuku Co Limited managing officer Kanji Anno, who is also the general manager of FA&DA global operations at Daifuku.

Besides material handling equipment such as automated guided vehicles, Vega also provides allied software related warehouses called WCS/WMS designed and developed at its Pune facility.