On April 8, Suzhou Chunxing Precision Mechanical Co.,Ltd. (SZ002547) announced its intention to transfer 100% equity in its wholly-owned subsidiary Chunxing Precision (India) Limited. The company has signed a conditional term sheet with Credicon Asset Management Pvt. Ltd. This transaction does not constitute a connected transaction and preliminary assessment indicates it won't qualify as a major asset restructuring.

Established on April 20, 2011 with registered capital of 91.2305 million Indian rupees, the Indian subsidiary maintains similar business operations to its parent company, covering R&D, manufacturing, sales and service of precision components for communication equipment and automotive parts, along with import-export of related technologies.

The ownership structure shows Chunxing Precision directly holds 99.7% of the subsidiary's capital, with the remaining 0.3% held through another wholly-owned entity.

Last May, the company reported its Indian subsidiary had developed new local telecommunications clients with mass production commencing in Q2 2024. However, financial performance reveals significant challenges for the 15-year operation.

Audited financials show the Indian subsidiary generated 251 million yuan in 2024 revenue with 12.5797 million yuan net profit, but recorded negative net assets of -373,600 yuan. More critically, unaudited 2025 figures indicate revenue plummeted 76.4% to 59.1499 million yuan, turning to a net loss of 25.2161 million yuan, while net assets further deteriorated to -24.4964 million yuan.

As of February 28, 2026, Chunxing Precision and its subsidiaries held combined claims of $21.1157 million against the Indian unit, including financial assistance and trade receivables. No guarantees or wealth management arrangements exist for the subsidiary.

The company stated the divestment decision follows comprehensive assessment of operational conditions, international geopolitical factors and market environment. Successful transaction completion is expected to recover related loans and receivables, thereby improving cash flow and easing liquidity pressure.

Buyer Credicon Asset Management, established in 2012 with 3 billion rupee capital, is headquartered in Hyderabad and specializes in professional services for construction and engineering industries, with three primary partners.

The final transaction price remains subject to good-faith negotiations between parties. A structured payment mechanism involves escrow arrangements for foreign commercial loans and at least 80% of inter-company payables, with remaining balances settled within 30 days post-transfer.

The two-phase payment structure includes initial settlement covering equity consideration, prioritized $2 million shareholder loan, and partial other obligations, followed by final settlement of remaining trade payables. Dispute resolution will be governed by Indian law with arbitration through Singapore International Arbitration Centre.

The announcement cautions investors that the transaction remains in planning stages with uncertain outcome. While specific financial impact cannot be accurately measured pending final terms, successful implementation is projected to enhance cash flow and alleviate liquidity constraints.