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Mahindras seek US ally

Mumbai, Dec. 18: The Mahindras are scouting for buyouts in the US through Mahindra Systech, the group’s automotive component subsidiary.

A senior official said the company was looking for a suitable partner in the US to expand the automotive and aerospace engineering division. The group is ready to invest between $25 million and $100 million in the acquisitions.

“We are looking for a US partner with valuations that match our profile. When it comes to automotive engineering business, Detroit will be a good option. For our aerospace engineering business, an acquisition in Seattle will be one of our top priorities. We are also looking at opportunities in Canada, where automotive engineering has picked up pace. The acquisitions will be completed within a span of 18 months,” the official told The Telegraph.

Established in 2004, Mahindra Systech manufactures parts and components that cater to the automotive and aerospace industry.

The company generates revenues of about $800 million, mostly through international operations.

It runs the business through six subsidiaries — Mahindra Engineering, Mahindra Sourcing, Mahindra Forging, Mahindra Gears, Mahindra Composites, and Mahindra Steel Products.

Mahindra Systech handles majority of its European operations through its collaborations with forgings giant Jeco AG and Schoneweiss GmbH in Germany and the Stokes Group in the UK.

Mahindra Engineering Services accounts for a revenue share of $25 million in Mahindra Systech and is growing at about 50 per cent year-on-year.

“We are looking at an incremental EBITDA of 2 per cent on a year-on-year basis. By March 2008, we are expecting an EBITDA growth of 1.5 per cent. At Systech, almost 75 per cent of our revenues come from international operations. Systech is poised to become one of the fastest-growing automotive component manufacturing companies in the world,” Hemant Luthra, president of Mahindra Systech said.

“We have already established our presence in Europe and are now planning to establish a footprint in the US,” Luthra added.

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