Mahindra & Mahindra (M&M) plans to invest at least Rs 250 crore more to ramp up its defence business. The investments will be spread over two years across three joint ventures.
The funds will mostly be used in increasing local development capabilities and setting up new manufacturing plants.
On Friday, the $14.4-billion Group signed an agreement with Israel's Rafael. Expected to be operational by June-July, the joint venture will initially be for naval systems such as anti-torpedo and unmanned protectors, but later develop equipment for land-based defence systems as well.
“This is important to us because, defence expenditure is now increasingly going to be on systems that lie on top of the hardware – that's where battles will be won and lost. This is the beginning of Mahindra's investments with such partners,” Mr Anand Mahindra, Vice-Chairman and Managing Director, M&M said.
Defence electronics
Another joint venture with US-based Telephonics, signed last November, also announced plans to manufacture defence electronics such as radar systems for both civilian and defence sectors.
While the Foreign Investment Promotion Board approval is expected in the next two months for both the tie-ups, M&M aims to initially invest Rs 100 crore in both joint ventures, where it will hold 74 per cent stake.
With Rafael it plans a larger facility in Pune, close to Mahindra Naval Systems' existing plant, while another plant with Telephonics will come up in Bangalore by early next year. “The investment will be much higher if we are awarded the Futuristic Infantry Combat Vehicle (FICV) tender by the Government,” Mr Mahindra said.
A further Rs 50 crore will be spent on new products at Defence Land Systems, M&M's two-year–old joint venture with BAE Systems where Rs 100 crore has already been invested on a plant in Faridabad.
Separately, M&M also said that it has got orders from Africa and Chile for armoured vehicles such as the ‘Marksman' from its UAE-based joint venture with Arabia Holdings and Ras Al-Khaimah Transport Investments.
M&M shares at the BSE were up 2.78 per cent to Rs 696.90 on Friday.