ON SHOPPING SPREE
New Delhi, Sept. 22: Automobile maker Mahindra & Mahindra Ltd may join a consortium of equity financiers to bid for Fiats car factory at Termini Imerese in Sicily.
Sources in the Mumbai-based company said M&M had been evaluating the Fiat plant for nearly a year. It is now considering joining a consortium, led by Cape Natixis, which is run by Italian financier Simone Cimino, to take over the unit that manufactures electric vehicles. M&M recently won the bid for Koreas SsangYong Motors.
Analysts speculate that Natixis may leverage Mahindras Reva Electric Car Company to make electric automobiles at the Fiat plant. M&M had picked up a 55 per cent stake in Reva earlier this year.
Fiat will stop production at the Termini factory, which employs around 1,400 workers, by the end of next year and has been scouting for buyers. Earlier, there were reports that the Tatas were interested in the plant. Invitalia SpA, which is the adviser to Italys industry ministry, is likely to announce a shortlist of bidders tomorrow.
Mahindra officials, however, said the group now wanted to focus on SsangYong — the acquisition would be completed in December.
Though M&M has cash balances worth Rs 1,700 crore and a debt-to-equity ratio of around 0.4:1, it does not want to strain itself by entering into too many deals.
The Mahindras are keen on the emerging aviation market and want to expand their presence in defence, all of which would take up large chunks of the groups reserves, company sources said.
M&M and the UKs BAE Systems will soon start building RJ31, a mine-protected vehicle, which will be sold to the army as well as to police forces in states affected by Maoist attacks.
M&M is also looking to make the FH77 B05 Advanced Howitzer in India that is now being imported for the army.
M&M entered the defence automotive sector by starting a joint venture — Defence Land Systems Ltd — with BAE.