Aston Martin buy could make Mahindra the new auto Bond
Till now a mass market player, their priorities will change as they focus on higher value product rather than just high volumes,” said VG Ramakrishnan, managing director, Frost & Sullivan, South Asia.
In June, M&M had said that it had earmarked R2,500 crore for acquisitions and investment in group companies. “The money will be used for acquisitions and equity investment in group companies,” M&M’s president of the automotive and farm equipment division, Pawan Goenka said.
“But, having said that, if we see that there is an interesting acquisition target which exceeds this budget, I’m sure we can raise the funds for that.”
Some analysts, however, view the purchase as an ‘unrelated diversification’. “The would require a lot of investment to meet Aston Martin’s growth plans and this is a totally unrelated diversification of the company with very little synergies,” said an analyst with a foreign brokerage firm on condition of anonymity.
Added a note from Edelweiss Securities, “Benefits of technology transfer from a luxury car maker to the Indian tractor and utility vehicle maker is questionable.”
However, pessimists on this deal may get allayed following compatriot automaker Tata Motors' recent example where it was successfully able to turn around JLR's operations after acquiring the company in 2007. JLR posted a $487 million profit in second quarter of FY13, up 77% over last year. The news on M&M failed
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