Mumbai: Conglomerate Mahindra & Mahindra Ltd (M&M) is looking to consolidate its engineering services and auto components businesses into a single entity under Mahindra Systech, which is currently the component manufacturing and engineering services arm of M&M.
Hemant Luthra, president, Systech group, said the consolidation will help the company position itself as an integrated supplier to auto makers and strengthen itself financially.
Shares of listed firms under Systech rose on the Bombay Stock Exchange (BSE) on Tuesday.
Mahindra Composites Ltd closed at Rs77.80, up 9.65%, Mahindra Ugine Steel Co. Ltd was up 4.91% at Rs54.50, and Mahindra Forgings Ltd surged 10% to Rs130.40. Sensex rose 1.44%. Analysts said the move would benefit both shareholders and the company’s balance sheet.
One roof: M&M Systech group president Hemant Luthra says the move will help the firm strengthen financially.
“It will also get reflected in company’s valuations,” said Vaishali Jajoo, an analyst at Angel Broking Pvt. Ltd.
“Most of these companies that have invested in the Systech group will not like to remain unlisted for a long time,” said Luthra, hinting at the possibility of a public offering at some point of time. He added that the company has already begun integration on the operational side and is examining proposals by merchant bankers for financial integration over the next 18 months.
M&M will likely hold 60% in the new integrated entity, he said. Luthra added M&M is close to finalising two deals in Australia, one to build small planes in a joint venture and another to acquire a component manufacturing firm.