M&M buys Amforge unit

The board of directors of Mahindra Automotive Steels Pvt Ltd (MASPL) and Amforge Industries Ltd (Amforge) today approved the proposal to merge into MASPL the demerged Chakan forgings unit of Amforge. This is subject to receipt of necessary approvals, including the Bombay High Court giving effect to the scheme of arrangement.

MASPL is a wholly owned subsidiary of automobile major Mahindra & Mahindra (M&M).

Following the merger, every shareholder of Amforge will get a share of MASPL.

M&M will invest Rs 140 crore in MASPL in one or more tranches to enable the company to acquire the conrods and crankshaft machining facilities and other balancing machines.

This transaction will result in bringing together the strengths of the Chakan unit and the resources of the Mahindra group.

"This will create an integrated forging and machining business that complements MSAT's manufacturing presence in steel, gears, sheet metal and composites," said Mahindra Automatic Systems And Technologies (MSAT) President Hemant Luthra.

MASPL, which has already initiated setting up of a machine line combined with the forging business, plans to establish itself as one of the largest integrated forgings companies in India.

Amforge's forging unit at Chakan supplies to Tata Motors, Maruti Udyog, Ashok Leyland, Kirloskar Oil Engines and Escorts apart from M&M. Its sales turnover in 2005 was around Rs 210 crore.