M&M is looking at buying one of the Australian facilities of Boeing. The US-based Boeing is present in 17 locations in Australia; its divisions there include aero structures, commercial aeroplanes and defence products, among others. The facility M&M may buy is either a components or aircraft manufacturing facility.
According to Hemant Luthra, President of Mahindra Systech, the umbrella entity of M&M’s components and engineering activity, Boeing is one of the companies that it is in talks with, but the company is also in talks with Airbus and others to take advantage of the offset clause. The said clause refers to the Indian government policy that any contract with a foreign supplier for military equipment above 300 crore imposes on the vendor an obligation to source business through Indian companies of 30% of the contract.
M&M has made clear its intent to grow the aerospace business aggressively and looks forward to working with multiple partners, who are likely to be interested in the company’s sophisticated facilities and planned capabilities. If the current talks fructifies, then this will be the third acquisition in Australia for M&M in this line of business. It bought majority stakes in component firm Aerostaff Australia and in aircraft maker Gippsland Aeronautics for Rs 175 crore in December 2009. The possible acquisition would make Mahindra Aerospace Pvt (MAPL), a part of Mahindra Systech, a contract manufacturer of aircrafts and components for third parties.
This deal will also help the company’s industrial products division to rapidly ramp up and provide compatible offerings to MNCs (multinational corporations). These MNC’s have to put in place certain arrangements to be in line with the 26 per cent Foreign Direct Investment cap and the 30 per cent offset clause mandated by the Indian government. These clauses will help the aerospace manufacturing industry in India to boom. With Rs 8,000 crore worth of defence contracts signed in the past two years under the offset policy mandated by the government, Indian component suppliers are gearing up to cash in on contracts worth Rs 1,30,000 crore which would be up for grabs in the next few years.
crackcrack
| Company Name | CMP |
|---|---|
| Maruti Suzuki | 10861.80 |
| Mahindra & Mahindra | 2934.00 |
| Hyundai Motor India | 1826.00 |
| Mercury Metals | 99.30 |
| Hindustan Motors | 22.09 |
| View more.. | |
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