Mahindra CIE acquires Aurangabad Electricals for ₹830 crore

Mumbai: Mahindra CIE Automotive Ltd has acquired Aurangabad Electricals Ltd for ₹830 crore, marking its entry into the aluminium die-casting industry. The acquisition will also strengthen its presence in the two-wheeler market, said the company in a regulatory filing on Tuesday. The transaction is expected to be completed by 10 April.

Aluminium die-casting is used to make smooth, defined metal parts by forcing molten metal under high pressure into a mould.

Aurangabad Electricals, founded in 1985, has five manufacturing facilities located across Aurangabad, Pune and Pantnagar in Maharashtra. It produces a range of body, brake and engine parts and supplies them to local and international two-wheeler and passenger vehicle companies and Tier-I auto component makers.

Aurangabad Electricals recorded revenues of ₹565 crore, ₹569 crore and ₹651 crore during fiscal years 2015-16, 2016-I7 and 2017-18, respectively.

It reported a profit of ₹34.4 crore in FY18.

Mahindra CIE made its last major acquisition in 2016 when it purchased automotive forging company Bill Forge for ₹1,332 crore in a cash and stock deal with the aim of diversifying its business and increasing revenue and profit from Asian markets.

India’s auto component industry is set for a wave for consolidation as top private equity (PE) firms are buying and aggregating mid-sized auto parts makers to tap into the lucrative global market.

In 2018, global private equity giant Blackstone Group LLP bought auto parts maker Comstar at a valuation of nearly ₹1,000 crore and followed it up soon after with the acquisition of Sona BLW Precision Forgings.

In April 2018, homegrown PE fund Kedaara Capital acquired Sunbeam Auto, which makes aluminium die casting parts, for nearly ₹650 crore.

Spain’s CIE Automotive SA is an industrial group specializing in supplying components and sub-assemblies to automobile as well as Tier-I auto part makers in India, Europe and Mexico. It is listed on the stock exchanges in Madrid and Bilbao.

Mahindra & Mahindra Ltd (M&M) had joined hands with CIE in September 2013 to form a global auto components supply network. It had acquired a 13.5% stake in the Spanish auto-parts supplier, while retaining 20% direct ownership in the new firm, Mahindra CIE Automotive, which is listed in India.

Last year CIE picked up an additional 5% stake for ₹483 crore (around $70 million). The Spanish firm now holds 56.32% in the listed Indian entity. Mahindra Group has a 11.44% stake in Mahindra CIE. The stake is held through M&M’s unit, Mahindra Vehicle Manufacturers Ltd.

For the year ended 31 December 2018, Mahindra CIE reported a net profit of ₹35 crore on revenue of ₹2,529 crore.