Mahindra Systech, the component-making division of the Rs 30,000-crore Mahindra & Mahindra group, has decided to consolidate all its companies.
Systech, which supplies about a fifth of its production to M&M’s automotive division, also plans to list the holding company to enhance shareholder participation.
At present, Mahindra Systech has about 16 companies that work on gears, composites, castings, forgings, stampings, steel, ferrites and engineering services. Five of these are forging companies, while one is a gear-making unit based in Europe.
Hemant Luthra, president, Mahindra Systech, said, “These companies have different sets of shareholders. When we had the QIP issue, several of these shareholders and others pointed out that valuations will improve because overall costs will come down if all these companies are put under one roof.”
The idea behind the consolidation of the different companies, according to Luthra, is to enable easier and faster access to the different companies to all its vehicle-making clients.
Mahindra Systech supplies to Bajaj Auto, Tata Motors, Toyota, Maruti Suzuki, Ashok Leyland and Hyundai, among others. The company is trying to provide a range of services to its customers ranging from key components to designing, styling and engineering of vehicles.
The company generated revenues of $850 million last year and is expecting to close the year with a turnover of $1 billion. This will be the highest recorded turnover for the company after the downturn in 2008 eroded its revenues as operations of its European subsidiaries were hit.
On being asked about its listing plans, Luthra said, “Possibility of doing it now is much better than it was six months ago because things have started to recover. Obviously, there are private equities involved in the unlisted companies and if we create a new structure obviously a listing will be involved.”
The Systech division is also involved into designing and making small aircraft that are mostly for personal use. This division, which falls under the engineering services, is called Mahindra Aerospace.
