M&M has mammoth expansion plans ahead

18 January 2007

Mahindra Systech, Mahindra & Mahindra's auto component arm, is racing ahead to become a full-fledged art-to-part business. CNBC-TV18 has more.

According to Hemant Luthra, president, Mahindra Systech, "We don't have footprint for engineering services in Germany or the US." So, an acquisition is the way to get it. Mahindra Systech has identified takeover targets and a successful acquisition will give it access to high-end intellectual property. But a few issues, like pricing, remain.

Luthra says, "Sometimes they feel the glass is half full and we feel it's half empty, also there's the issue of emotions. We have to get over that barrier in many of these cases."

And while they negotiate with the foreign firms, back home they have lined up an expansion plan that includes doubling its Chakan forging capacity to 80,000 tonnes and more than doubling capacity at its DGP Hinoday unit to 90,000 tonnes.

Besides, it's setting up a grey iron component making facility for Rs200 crore. It will also supply Mahindra's joint venture partner International Truck and Engine Corporation.

With this increase in size to materialise over the next 18 months, Mahindra Systech hopes to cross revenues of a billion dollars. It's betting consistent demand will justify that expansion.