India’s largest maker of utility vehicles such as the Scorpio, Mahindra and Mahindra Ltd (M&M), may say this week that it has bought the entire stake in an Italian design and research company as it seeks to expand its engine design capabilities, said people familiar with the matter.
This will be the second acquisition of a design company by Mumbai-based M&M this year after it purchased all of GR Grafica Ricerca Design Srl, another Italian firm, in March. A spokesperson for the company refused to comment.
Indian auto makers such as Ashok Leyland Ltd and Eicher Motors Ltd are spending money to buy or build auto design service businesses to take advantage of outsourcing opportunities.
Last year, for example, Ashok Leyland acquired all of Defiance Testing and Engineering Services Inc., a Detroit, US-based company, for $17 million (Rs7.2 crore).
M&M has made some 14 acquisitions since 2004 of which eight were in the Indian market and the rest are overseas. The acquisitions overseas have been mostly of component makers, barring a tractor maker in China, called Jiangling Motor Co.
Since it started as a maker of tractors and utility vehicles six decades ago, the Mahindra Group has diversified into selling components, information technology services and even holiday packages.
In vehicles, it has joint ventures with truck makers, makes the popular Logan sedan in collaboration with Renault SA of France, and is eyeing a stake in two-wheeler maker Kinetic Motor Co. Ltd, say other people familiar with the matter.
M&M is spending around Rs6,400 crore over the next three years towards capacity expansion, new product development and research and development. Today, almost a third of the company’s Rs25,929.60 crore revenues comes from overseas operations.
The Mahindra and Mahindra stock fell 4.2% to Rs568.45 in a weak Mumbai market on Wednesday.