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Auto Parts Giant Formed in Mahindra, CIE Merger

June 16, 2013
CIE Automotive holds 51% majority High forging capacity in India, Europe Creating global presence

India’s Mahindra Group and the Spanish auto parts supplier CIE Automotive S. A. agreed to pool an extensive list of operations to form a new global organization with total annual billings estimated at $3 billion.

The two groups propose combining Mahindra Systech -- the parts business for Mahindra Group, a truck and off-road equipment OEM – with CIE Automotive’s forging group, which manufactures automotive components and parts in Europe, Brazil, North America, and China.

By way of the Systech portfolio, the group being established will have a high capacity for producing automotive forgings, in India, Germany, and England. Through the CIA Automotive assets, it will have forging operations in Brazil, Lithuania, and Spain. The range of operations includes hot forging, warm forging, and cold forging, and the products cover the range of automotive applications, from engine and powertrain parts, to chassis and steering system components, to structural elements.

Mahindra Systech also includes Mahindra Forgings Ltd., Mahindra Ugine Steel Co. Ltd., Mahidra Composites Ltd., Mahindra Hinoday Industries Ltd., and Mahindra Gears Ltd. It’s one of India’s largest automotive component manufacturers, especially for automotive and light truck crankshafts in India, and heavy-truck forgings in Europe.

A variety of other production technologies will be contained in the new group from both partners’ holdings, including metal castings, plastic parts, stampings, gears and other precision machined parts, composite parts, painted elements, and roof systems, among others.

CIE Automotive will invest $116 million to hold a 51% stake in the new company, and Mahindra Group will acquire a 13.5% share in CIE for a reported $126 million. That will make it the second-largest stakeholder in CIE, with two directors on the corporate board.

The remaining shares of the new business will be held by institutional investors and stockholders.

To execute the combination, Mahindra will consolidate all of its auto parts businesses into the Mahindra Forgings Ltd. unit, and this will be renamed Mahindra CIE Automotive.

Mahindra emphasized the importance of establishing a global manufacturing presence, as OEM’s passenger vehicle platforms become more standardized, and as the heavy truck market expands. It also noted that the new group would have an immediate strength in emerging economies, including India and Central and South America. 

Finally, it underscored the importance of creating a portfolio of operations with multiple manufacturing capabilities.

"Eight years ago, we at Mahindra set out to build an Indian automotive supplier with a global footprint and this drove a series of acquisitions in India and Europe for us,” stated Mahindra Group chairman Anand Mahindra. “We have been listening closely to our customers who have asked to step up our globalization efforts and follow them around the world.

“This ‘grand alliance’ with CIE enables us to ‘rise’ above competition, quickly extends our reach into new geographies, and grow our collective product portfolio in the coming years,” the chairman continued.