Earning My Money

Mahindra Aero eyes strategic investor 

Chennai: The Mahindra group is looking to scale up its aerospace business to capture a slice of the $12-billion offset business in the Indian defence market. Group company Mahindra Aerospace Private (MAPL) is looking to rope in a strategic investor (it already has Kotak PE) and is pumping in Rs 284 crore in a new facility in Karnataka for components, assemblies and aerostructures both for its own and other large aircraft. The idea, said a top company official, is to create competence for components on one hand and build compact, rugged, affordable aircraft—‘Scorpio of the aero industry’—on the other.
    “We are talking to potential strategic investors including OEMs and tier I suppliers. We are looking at a relationship that will help us access both customers and technology—not just for the offsets business but for aerospace competency beyond that too ...,” Hemant Luthra, president, Systech, M&M, told TOI. A tie-up is a “distinct possibility” in the quarter. The top tier 1 suppliers globally are players like Alenia, part of the Italian group Finmeccanica, Premium Aerotec, Aernnova Spain, Aerolia, and Spirit Aerosystems but Luthra refused to speculate on the name of the potential strategic partner. The $7.1 billion Mahindra group is building a 20-acre component plant at Narsapura in Karnataka.
    The company has acquired equipment from the Boeing Aerostructures plant in Melbourne Australia for the Narsapura plant. “We bought the assets of Boeing's metallic aero structure plant and it is being shipped as we speak. Acquisition of assets of Boeing Aerostructures Australia further enhanced by additional capabilities being built will ensure that the India plant has both sheet metal cutting and several distinct unique capabilities in terms of stretch forming and post machining processing capabilities matched by few others and should give us a distinct advantage to meet tier I plus OEM needs, including our own as we build out our own NM5 and GA aircraft,” Luthra said.
    Kotak Mahindra owns one-third stake in MAPL which has two arms —components, assemblies and aircraft. The former is built around the acquisition of Aerostaff and the latter around Gippsland—both Australian companies that MAPL acquired last year. The new strategic investor is rumoured to be looking at an equity stake in the components and assemblies arm. There are also plans to list the aerospace business but not in the near future.

 Aleem Ahmad

PGDM 2nd Sem