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5. LS Automotive Corp. (Formerly Daesung Electric Co., Ltd.) Business Report FY ended Dec. 2017

LS Automotive Corp. (Formerly Daesung Electric Co., Ltd.) Business Report FY ended Dec. 2017

Business Plan

-The Company is aiming to become a global company in the area of on-board electronics business. Having adopted a new corporate name, LS Automotive, the company is expecting marketing synergies with other companies in the Group including LS Cable, which produces high power harnesses for green vehicles, and LS Mtron, which produces automotive hoses. (From a press release on November 3, 2016)

Reorganization

-The Company plans to transfer its automotive component business to a newly-established company, LS Automotive Technologies. The transfer cost will be Korean won (KRW) 750 billion. (From a press release on August 18, 2017)

-A South Korean conglomerate, LS Group, is planning to sell a copper foil and thin film division of LS Mtron Ltd. to a US investment company, Kohlberg Kravis Roberts & Co. LP (KKR). The conglomerate is also planning to sell all divisions of LS Automotive Co., Ltd. to a joint company to be established by LS Mtron and KKR. The total transaction cost is projected to reach Korean won (KRW) 1050 billion. The new joint company will be owned 53% by LS Mtron and 47% by KKR, and become a parent company of LS Automotive. LS Automotive was established in 1973 to produce and sell automotive electric components such as interior switches, lamps, sensors, body control systems and relays. (From a press release on July 27, 2017)

Recent Development Outside Korea

-The Company established a Mexican subsidiary in November 2016. It is considering making further investments to increase the subsidiary's capital, as it aims to address risks related to international trading and commerce. (From the Company's annual report for 2016)

-In November 2016, Daesung Electric Co., Ltd. announced that it has adopted a new company name, LS Automotive Co., Ltd. Daesung Electric was formed in 1973 and joined the LS Group in 2008. Its sales in 2016 are expected to reach KRW 900 billion. (From a press release on November 3, 2016)

Investments Outside Korea

-The Company announced that it will establish a subsidiary in Saltillo, Coahuila, Mexico in November 2016. The new company will construct a plant by 2018 to produce electric devices for the North American facilities of OEMs including Hyundai Motor, General Motors, Chrysler, and Nissan. (From an announcement by the company on November 2, 2016)

Contracts

-The Company announced that it will supply automotive body control units to Iran Khodro Company (IKCO), an Iranian state-run automaker, under a KRW 105 billion contract. The system is an integrated control technology for car electronic accessories like interior lamps, wipers systems, door locks, and seat adjusters. Over the next 6 years, LS Automotive will supply the systems for 480,000 vehicles. (From a press release on November 30, 2016)


-In December 2013, the Company announced that it is supplying multi-function switches to Daimler. It will also supply relay switches to the automaker, starting in February 2014. (From a press release, December 30, 2013)


-The Company will supply steering switches for medium- and full-size sedans manufactured by Nissan Motor Co., Ltd. The Company expects to generate 47.5 billion won in sales from this program business, which covers a period of five years starting in 2012. In 2008, Daesung Electric was awarded a contract to supply push switches to Nissan. (From a press release on Apr. 15, 2010)


-The Company has won program business from Audi to supply DC-DC converters for idle stop systems. This program, which covers a period of seven years from 2010, is expected to generate an additional 39 million euros in sales. (From a press release on Nov. 18, 2009)

Acquisition

-In August 2010, the Company acquired the interior lighting business from IHL Co., Ltd., a lighting manufacturer in the Hyundai Motor Group.

Subsidiaries

-In October 2015, Daesung Electric India received the High Efficiency Award at the Tata Motors Annual Supplier Conference 2015.

-In November 2014, Daesung Electric India established a plant in Pune, India.

-In March 2012, Daesung Electric India received the Excellent Supplier Award from Hyundai Motor India.

-In February 2010, Daesung Electric India received the Best Localization Award from Hyundai Motor India.

-In August 2009, Daesung Electric India received the Excellent Supplier Award from Hyundai Mobis.

-In April 2009, Daesung Electric India received the Excellent Supplier Award from Hyundai Motor India.

-In December 2007, the Company established India Electric Private Ltd., a wholly owned subsidiary, in Tamil Nadu, India to manufacture automotive switches. Operations at this facility started in July 2008.


-In April 2011, Daesung Wuxi Electronics signed a strategic partnership agreement with JAC Motors.

-In December 2009, Daesung Wuxi Electronics won the Excellent Quality Award from SAIC-GM-Wuling Automobile (SGMW).

-In April 2009, the Company acquired the remaining 30 percent of the shares in Delphi Daesung Wuxi Electronics Co., Ltd., making it into its wholly owned subsidiary. The Chinese subsidiary thereby changed its name to Daesung Wuxi Electronics Co., Ltd.


-In June 2016, the Company reacquired the ISO 14001 environmental management certification.

-In October 2013, the Company obtained the OHSAS (Occupational Health & Safety Management System) 18001 certification.

-In December 2011, Qingdao Daesung Electronics won the Excellent Supplier Award from JAC Motors for the third consecutive year.

-In November 2008, the Company made Qingdao Daesung Electronics Co., Ltd. its wholly owned subsidiary by acquiring the remaining 51 percent equity stake in the company, which was held by Deltech.

Certification/Award

-In September 2013, Daesung Electric won the Above & Beyond Award from Delphi of the U.S. The award is part of Delphi's Pinnacle Awards, which are given to outstanding suppliers that made strong commitment. The Pinnacle Award was established in 2001. (From a press release on December 30, 2013)

-In December 2012, the Company was awarded the Level 2 certification of Automotive SPICE (Software Process Improvement and Capability Determination), becoming the first Korean auto parts company to obtain this standard established by European automakers for in-vehicle equipment software. (From a press release, December 20, 2012)

R&D Structure

-The Company opened its technical center in 1986.
-In July 2012, the Company announced that it will expand its reliability verification center in Korea. After the construction project is completed, it will install more than 20 new pieces of equipment. Furthermore, another 14 pieces of testing and measuring devices will be added by the end of 2012. (From a press release, July 1, 2012)
-The Company moved its R&D center to Anyang, Gyeonggi-do in 2013
-As of Dec. 31, 2014, a total of 311 researchers engage in research and development activities.
-As of December 2016, a total of 348 employees engage in R&D activities conducted at the HMI Division, Production Engineering Division, R&D Division, Electrical Devices Division, China Business Division, Quality Management Division, and International Business Division.

R&D Activities (FY ended in December 31, 2017)

Introduction of technologies

-The Company and Delphi Packard Electric Systems of the U.S. agreed on Delphi's providing junction box technology to the Company.
-The Company and Immersion of the U.S. agreed on Immersion's providing haptic technologies to the Company.