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| Edited By: Neha Rishi |Source: DNA |Updated: Mar 17, 2018, 02:02 AM IST
Mahindra Systech, the component arm of Mahindra & Mahindra (M&M), is eyeing revenues of $150 million annually in the next five years from the aerospace component production business.
“As per the government regulations, 30% has to be offset to the Indian original equipment manufacturers so there is a huge opportunity available in the offset capabilities business which is worth $7.5 billion. We hope to gain a market share of 10% in this segment,” Hemant Luthra, president, Mahindra Systech, said.
The prototypes of NM5, a plane being co-designed by Mahindra Aerospace Pvt Ltd (MAPL), Systech’s aerospace arm, in a joint venture with National Aeronautics Laboratory (NAL) are ready and will begin flying before the end of this fiscal, Luthra said.
“By designing the plane from scratch we have established ourselves as a company in the aerospace segment. By doing this we would like to see Boeing and Airbus identifying us when they are looking at offset opportunities.”
Luthra said that the idea of building NM5 was not only to show that the company can manufacture aircraft but also that the company can design, engineer and provide offset capabilities. It is also designing a combat helicopter for Hindustan Aeronautics Ltd. MAPL had secured manufacturing licence from Seabird, an Australian company to build 24 2-seater planes. “These were built by Mahindra Engineering and exported to Jordan. Each plane cost $4,00,000,” he said.
In order to get a toehold in aerospace segment, the company has held discussions with Boeing Co and Airbus SAS seeking orders. Luthra said that the company is spending $10 million to set up a facility in Bangalore to produce aviation parts and has received board’s approval to spend another $30-35 million as and when required. The facility will be ready by July. Luthra said that the company is keen to form a joint venture for technology/process transfer or acquisition of Australian aerospace companies. It is already in advance talks with some Australian companies and will strike a deal in the next 3-4 months, Luthra said.
While it is bullish on aerospace segment, Systech plans to consolidate its auto component units into a single entity. Companies like Mahindra Forgings, Mahindra Composites, Mahindra Castings, Mahindra Gears, Mahindra Ugine will all be wrapped up into one company Systech.
“It makes sense to get all these companies under one roof. M&M would hold 55-60% in the consolidated entity and the consolidation is likely to happen in less than 3 years time. We have already done the consolidation at the operational level; however at the financial level it will take some time. MAPL will remain as a separate entity as it is still in nascent stage,” he said.
The combined revenues of all the companies under Systech have dipped to $700 million from $950 million in FY09 owing to recession in Europe. Systech has made a total investment of €245-250 million in all its overseas acquisitions.
