Hindujas, M&M, BFL in race for Thyssen unit

The Hindujas, Mahindra & Mahindra (M&M) and Bharat Forge are set to join the race for the main forging unit of Germany's ThyssenKrupp in a deal that is estimated by investment bankers at over $1 billion (Rs 4,000 crore).

The forging line has a turnover of over $800 million (Rs 3,200 crore) and ThysenKrupp is looking for a premium of 30 per cent to 40 per cent," said a person familiar with the development.

The forgings unit belongs to ThysenKrupp Technologies, a subsidiary of the $78 billion ThyssenKrupp AG. The company had sold its precision forging business to the Delhi-based Sona Group for an undisclosed amount in January.

ThyssenKrupp Technologies's mechanical components unit makes crankshafts through a forging line. It is this business that the Indian companies have been approached to bid for, sources familiar with the developments said.

ThyssenKrupp denied the move in an email response, but the Hinduja group confirmed it has initiated talks with investment bankers for the acquisition. M&M's President Hemant Luthra said the company did not want to comment and Bharat Forge did not respond to queries on the deal.

"An investment banker has approached us for the deal," confirmed Prabal Banerji, Hinduja Group's chief finance officer.

The group's Ennore Foundry is the country's largest automotive jobbing foundry with a production capacity of 48,000 million tonnes of grey iron casting.

"Talks are at an initial stage and we have to see if the deal is strategic to us," Banerji said.

Sources, however, said Bharat Forge is likely to be the most aggressive bidder for the unit which would make it the company world's largest player in the forging business.

The company is the largest exporter of auto components from India and a leading global chassis component manufacturer with manufacturing facilities spread over 10 locations and six countries, including three each in India and Germany.

The Mahindra group has been a late entrant in component manufacturing, starting operations only in 2004. The business unit aims to generate Rs 4,000 crore in turnover by 2010 with aggressive plans for acquisitions.

Group company Mahindra Forgings acquired Stokes Forgings in the UK, besides Jeco Holding AG and Schöneweiss GmbH in Germany.