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Bill Forge

Mahindra CIE Automotive to acquire Kedaara-backed Bill Forge

12 September, 2016

Automotive components supplier Mahindra CIE Automotive Ltd (MCAL) has inked a deal to buy Bengaluru-based Bill Forge Pvt. Ltd, which manufactures forged and machined components for automotive firms, for Rs 1,331 crore (around $200 million).

The deal involves a cash and stock component where private equity firm Kedaara Capital will get a part-exit. To allow the Spanish co-promoter of MCAL retain majority stake after fresh issue to Bill Forge shareholders, the listed firm shall also issue more shares worth Rs 450 crore to CIE as part of the deal. Separately, it plans to raise Rs 700 crore through various modes.

In an exchange filing, MCAL said the transaction would help diversify its product and geographic spread and expects to complete the deal by October. The joint venture between Mahindras and Spain’s CIE, where the foreign partner owns a majority stake, is currently largely restricted to the western region and this deal would provide an entry into other markets. It would also increase exposure to cars against its current mainstay of utility vehicles.

In the past, the firm had said it is planning inorganic expansion via partners/acquisitions and wishes to cater to Japanese original equipment manufacturers (OEMs), going forward. It had also said it is looking at new opportunities in untapped regions for inorganic expansion.

The acquisition of Bill Forge will also help MCAL reduce client concentration. At present, standalone revenues are driven by M&M and Tata Motors which account for 45% and 10% of the total, respectively.

In September 2013, the Mahindra Group joined hands with Spanish auto parts supplier CIE Automotive SA to form a global automotive components supply network with annual revenues of around $3 billion and operations in North America, South America, Europe and Asia. M&M acquired 13.5% stake in CIE SPA while retaining 20% direct ownership in the new firm Mahindra CIE Automotive.

The business is now held through listed businesses in Spain, Brazil and India. As per the deal, the Mahindra Group brought all component businesses (both listed and unlisted) under the existing listed firm Mahindra CIE (earlier Mahindra Forgings).

Bill Forge manufactures cold, warm and hot forged and machined components for automotive and non-automotive sectors. Established in 1985, the company expanded its product portfolio over the years. It is the largest manufacturer of steering races and retainers in India with close to 90% market share. Its clients include two-wheeler manufacturers Bajaj Auto Ltd, Hero MotoCorp Ltd, TVS Motor Company Ltd, Honda Motorcycles & Scooters India Ltd and Yamaha Motor India Ltd, according to a 2015 report by Icra.

It has six manufacturing plants in India and one unit coming up in Mexico. In FY2015-16, Bill Forge reported profit after tax of Rs 51.4 crore on revenues of Rs 582.3 crore.

This article has been modified to reflect details of the transactions, as per public disclosure.

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Mahindra CIE Automotive to acquire Kedaara-backed Bill Forge

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