Mahindra & Mahindra Ltd (M&M) said its unit Mahindra Defence Systems Ltd would acquire the 26 per cent stake held by BAE Systems Plc in their joint venture company Defence Land Systems India Pvt Ltd (DLSI). The company stated that changes in the business environment and customer procurement frameworks have led the shareholders to conduct a strategic review of DLSI.
The decision to end the venture would enable both the companies to consider each opportunity on a case by case basis, including continuing to explore opportunities for co-operating on specific defence projects, it added.
“In keeping with the Indian defence acquisition scenario and the current market conditions, the managements of M&M and BAE Systems have decided that Mahindra’s 100 per cent subsidiary Mahindra Defence Systems will acquire BAE’s 26 per cent shareholding in the Defence Land Systems India joint venture,” said Khutub Hai, chairman & managing director of Mahindra Defence Systems.
“Since the establishment in 2009 of the M&M (74 per cent) and BAE Systems (26 per cent) joint venture, DLSI, there has been significant evolution in the Indian land systems market. Developments in both the industry environment and in customer procurement frameworks and acquisition strategies have led the shareholders to conduct a strategic review of the DLSI business,” the automobile to technology major said.
At the time of signing the JV agreement, the two companies had said that the parent companies would initially invest $21.25 million over a period of three years, according to reports.
M&M also planned another defence JV with Israel’s Rafael, which was rejected by the government in December 2012. In the same month, M&M said it would buy out its overseas partner Navistar International Corp in two joint ventures, producing and marketing trucks and engines in the country, for Rs 175 crore ($33 million). The partners had formed two JVs – Mahindra Navistar Automotives Ltd and Mahindra Navistar Engines Pvt Ltd. Post the transaction, both firms will become wholly owned subsidiaries of M&M.
In January this year, Mahindra & Mahindra said it would invest $900 million over the next four years in products to be developed jointly with its South Korean unit Ssangyong Motor Co Ltd.
(Edited by Sanghamitra Mandal)