Mahindra Forgings rose over 4% and touched the weekly high of Rs72 on the BSE.
Mahindra Systech, the holding firm for the slew of 16 component businesses in the $14.4-billion Mahindra & Mahindra Group, will start the process of reverse merger of various companies with Mahindra Forgings, its listed entity by April, a senior company official said.
Hemant Luthra, who heads Mahindra Systech, said that the intent, based on the feedback from both customers and investors and subject to board approval, was to create one Systech by merging all companies into Mahindra Forgings, which is a listed entity.
'We have put teams together. We are talking to respective private equity players (of component firms) to get their consent to exchange their stakes in different entities for a stake in Systech,' said Luthra, a member on the M&M board and president of Mahindra Systech.
Ernst & Young has been hired by the firm to value the businesses. Systech, since its inception in 2004 has made substantial acquisitions across Germany which includes component firms such as GSA. Jeco, Falkenroth, Schneweiss, Stokes in UK, Metalcastello in Italy and Hinoday, Amforge and SAR Transmissions in India. It has 24 manufacturing plants in Europe and India with around 12, 000 employees. It makes a range of auto components that include pistons, crankshafts, stub axles, hobs, gears, hood and plasma arc, among others.
'Every day we are making progress towards setting up this new unified entity,' Mr Luthra added. 'We have tested it with independent board members of the companies but we have not sought or obtained a formal board approval,' he added.
There is also a possibility that the merged entity may enlist a strategic investor. In November last year, Sanyo Special Steel and Mitsui & Co entered into a definitive agreement with Mahindra Ugine Steel to establish a joint venture for making special steel.
The new entity will have five verticals - forgings, castings, gears, stampings and composites comprising a dozen or more entities operating under the verticals. 'We will formally approach the boards of all the companies as soon as we have a handle on respective valuations post the closing of FY12,' Mr Luthra added. Mr Luthra declined to talk about the value of the combined entity which has estimated at $400-500 million.
The company hopes that by bringing all the business under one entity, Mahindra Systech will be able cater to the needs of its client more efficiently and at a lower cost. This move is expected to deliver cost benefits because of economies of scale with a common market and sales front for all the companies' right from forgings, castings, stampings, gears and composites, among others.
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Mahindra Systech, the holding firm for the slew of 16 component businesses in the $14.4-billion Mahindra & Mahindra Group, will start the process of reverse merger of various companies with Mahindra Forgings, its listed entity by April, a senior company official said.
Hemant Luthra, who heads Mahindra Systech, said that the intent, based on the feedback from both customers and investors and subject to board approval, was to create one Systech by merging all companies into Mahindra Forgings, which is a listed entity.
'We have put teams together. We are talking to respective private equity players (of component firms) to get their consent to exchange their stakes in different entities for a stake in Systech,' said Luthra, a member on the M&M board and president of Mahindra Systech.
Ernst & Young has been hired by the firm to value the businesses. Systech, since its inception in 2004 has made substantial acquisitions across Germany which includes component firms such as GSA. Jeco, Falkenroth, Schneweiss, Stokes in UK, Metalcastello in Italy and Hinoday, Amforge and SAR Transmissions in India. It has 24 manufacturing plants in Europe and India with around 12, 000 employees. It makes a range of auto components that include pistons, crankshafts, stub axles, hobs, gears, hood and plasma arc, among others.
'Every day we are making progress towards setting up this new unified entity,' Mr Luthra added. 'We have tested it with independent board members of the companies but we have not sought or obtained a formal board approval,' he added.
There is also a possibility that the merged entity may enlist a strategic investor. In November last year, Sanyo Special Steel and Mitsui & Co entered into a definitive agreement with Mahindra Ugine Steel to establish a joint venture for making special steel.
The new entity will have five verticals - forgings, castings, gears, stampings and composites comprising a dozen or more entities operating under the verticals. 'We will formally approach the boards of all the companies as soon as we have a handle on respective valuations post the closing of FY12,' Mr Luthra added. Mr Luthra declined to talk about the value of the combined entity which has estimated at $400-500 million.
The company hopes that by bringing all the business under one entity, Mahindra Systech will be able cater to the needs of its client more efficiently and at a lower cost. This move is expected to deliver cost benefits because of economies of scale with a common market and sales front for all the companies' right from forgings, castings, stampings, gears and composites, among others.
....more info