The Hindu Business Line : Mahindra Systech looking to diversify

New Delhi, Oct. 13 Mahindra Systech, the auto component arm of Mahindra & Mahindra, is looking to more than double its revenues by diversifying its clientele to power plants, railways, defence, aerospace and oil refineries.

This comes as dipping automobile sales in the US, Europe and many of the emerging markets are forcing auto component companies to explore options to de-risk their businesses.

The company’s President, Mr Hemant Luthra, told Business Line, “At present our revenues from non-auto business is 5-10 per cent. Over the years, we would like it to grow to 20-25 per cent. ”

Mr Luthra explained that the extent to which the company could diversify into other verticals would depend on the flexibility at its assembly lines.

Mahindra’s strategy is similar to many other domestic component makers such as Bharat Forge, Amtek Auto who are also using their forging capacities for other product categories to cushion themselves against a slowdown in the automobile industry.

Global sales position

When asked how the sluggish sales in the overseas market were affecting the company’s outlook, “At present we are going full throttle,” remarked Mr Luthra.

“Our business in the US is not so significant. Hence, we are not severely impacted. But Europe is also now slowing down. By the next calendar year onwards, we may also feel the pinch,” he added.

More acquisitions

The company, however, said that its appetite for acquisitions in auto component space remains. Post the acquisition of Italian two-wheeler design company, Engines Engineering, it is looking to buy yet another one from the same region.

“We are now looking at an Italian simulation company which will be in sync with our earlier acquisitions,” he stated, without divulging any further details.

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