Auto components maker Mahindra CIE is on the lookout for acquiring an auto component company in Korea, through which it expects to gain access to players such as Hyundai Motor Company and Kia Motors.
Auto components maker Mahindra CIE is on the lookout for acquiring an auto component company in Korea, through which it expects to gain access to players such as Hyundai Motor Company and Kia Motors. Mahindra CIE, an alliance between the CIE group of Spain and the Mahindra group, has for long expressed its keenness to serve needs of Hyundai in India, and a strategic acquisition could swiftly get it on the vendors list. The company will also look to serve requirements of SsangYong Motor, the Korean subsidiary of Mahindra and Mahindra (M&M), through such an acquisition. Mahindra CIE is also looking to expand into other south-east Asian countries like Vietnam, Thailand and Indonesia. Hemant Luthra, chairman, Mahindra CIE, said: “We are looking at Vietnam, Thailand, Indonesia and Korea. We want to acquire. We don’t want a joint venture.”
The company has a number of manufacturing plants across the globe. It has a total of 20 manufacturing facilities, of which 12 facilities are located in India and eight facilities are located across Germany, Spain, Lithuania, Italy and the UK. Apart from these, CIE runs forging operations in Brazil, Mexico and China, which will soon be put into the overall Mahindra CIE business. Luthra said, “We are in Mexico servicing the North American market. We are in Brazil, where the falling real has made the export business more competitive. We are also in China and India.”
The company has been looking to acquire auto component players in south India. Bill Forge, a Bengaluru-based company, was acquired by it in late 2016 and helped it diversify into the two-wheeler segment. It also added six manufacturing facilities in India. An acquisition in south India, according to Luthra, would also help tap the second-biggest player in the domestic passenger vehicle space, Hyundai. Currently, the biggest clients for Mahindra CIE are M&M, Tata Motors and Maruti Suzuki, accounting for more than 50% of the company’s revenues from India.
Luthra said he is planning to invest in companies that would facilitate a shift to electric vehicles. “We look at acquisitions where we feel there are holes in our portfolio. If electric cars are coming, we should have a little more of aluminium in our business, and we should have more plastics in our portfolio.” He, however, added that electric vehicles are not a threat to Mahindra CIE’s business, saying that currently 19% of the parts that the company manufactures go into the internal combustion engines. According to Luthra, what makes him look abroad for acquisitions is the inability to raise debt in India for his company, in which CIE Automotive of Spain, holds a majority stake.