M&M plans to pick up stake in Amforge

Amforge is the 2nd largest player in the auto ancilliary industry.

Within a day of announcing the acquisition of the manufacturing assets of Chinese company Jiangling Tractor, Mahindra & Mahindra (M&M) is planning to pick up equity in the Mumbai-based automobile ancilliary company, Amforge Industries.

Sources close to the development said M&M might either acquire majority control in Amforge Industries at one go or pick up 14 per cent initially, which might later be raised beyond 15 per cent, along with a mandatory open offer for another 20 per cent.

"M&M executives visited the Amforge Industries plant. Both the companies are in talks for an equity participation. However, nothing has been finalised," a source said.

An Amforge Industries executive confirmed that "talks are on", while the M&M spokesperson declined to comment. Repeated attempts to reach Amforge Industries Chairman and Managing Director Puneet Makar failed.

Amforge, the second largest player in the automobile ancilliary industry after Bharat Forge, has been in business for four decades. Makar restructured the family-run company, which has a capacity of 75,000 tonnes annually, two years ago after acquiring a majority stake of 52 per cent.

The Amforge Industries scrip today closed at Rs 132.25, at the upper end of the circuit filter on the Bombay Stock Exchange.

On September 30, 2004, promoters held 52.44 per cent in Amforge, mutual funds and UTI together held 4.5 per cent, Reliance Capital Treasury 4.3 per cent, banks, insurance companies 1.7 per cent, FIIs 8.91 per cent, private corporate bodies 8.87 per cent and the public held the remaining 21.9 per cent.

M&M is also in talks with Rajkot-based gear maker Sar Auto, according to industry sources. The company had yesterday announced that it had signed a memorandum of understanding with Jiangling Motor Corporation Group, the holding company of Jialing Tractor. As per the deal, the acquistion will be made through a joint venture between M&M and Jiangling Motor.

---

Forging ahead

Up for grabs
Amforge Industries is the second largest player in the automobile ancilliary industry

Stock move
M&M may either acquire majority stake at one go or pick up 14% initially, which may later be raised beyond 15%

On the BSE
The Amforge scrip closed at Rs 132.25, the upper end of the circuit filter