Mahindra auto parts arm on buying spree

Mahindra Systems and Automotive Technologies (MSAT), the auto components arm of Mahindra and Mahindra (M&M), is on an acquisition spree.

MSAT is in an advanced stage of negotiations for acquisition of at least four overseas companies in the areas it operates "� stamping, composites, forging and gear box. The total acquisition cost may be around Rs 1,000 crore.

Sources close to the development said the acquisitions would help MSAT to register sales of $1 billion, way ahead of its target of achieving this level by 2010. The company last year registered sales of $800 million.

MSAT's alloy steel arm, Musco, which produces stampings for the automotive industry, will acquire a stamping company in the UK shortly. It will be Musco's maiden overseas venture as the company until now was largely focused on its Indian operations.

In India, the company operates through three plants catering to clients such as Tata Motors, Ashok Leyland, Kinetic Motors and Renault India.

Mahindra Composites (formerly Siro Plast), makers of quality composites, will purchase a company in the US. The company, which has a technical tie-up with Menzolith of Germany, addresses manufacturing formulations, processes, applications engineering and mould design cycles through its facilities based in Pimpri and Mangaon in Maharashtra.

Mahindra SAR, the gear-box making arm of MSAT, is in advanced stages of negotiations with an Italian company. The acquisition cost could be in the range of Rs 350 crore.

Hemant Luthra, president, MSAT, said, "We have been growing at a very fast pace for the past few years and will continue to do so. This also involves opportunities arising through inorganic growth in foreign markets."

However, he declined to comment on specific acquisitions. "We are looking at options for all our existing business modules, including gears, stamping, forging and composites," he further added.

MSAT is also looking for a buyout in China. However, it is not clear with which of its auto component divisions will the newly acquired company be merged. As most of the companies in China are state-owned, MSAT is likely to partner a Chinese company for any acquisition in the country.

"Inorganic growth of the auto components division will help the company achieve greater margins in lesser time, as the company is trying to focus more on its bottom line than its top line," added an auto analyst.

IN TOP GEAR

The M&M arm is in an advanced stage of negotiations for acquiring four overseas companies at Rs 1,000 crore

The acquisitions will help MSAT to register sales of $1 billion, way ahead of its target of achieving this level by 2010

In India, the company operates through three plants catering to clients