M&M buys major stake in Rajkot auto parts firm

Mahindra & Mahindra has acquired a majority stake in Rajkot-based SAR Transmission Pvt Ltd, a company engaged in the manufacture of automobile gears and transmissions, for over Rs 10 crore.

SAR Transmission is a joint venture that M&M has with Sar Auto Pvt Ltd.

Following the sale, Sar Auto will remain the holding company of its promoters.

Sar Auto had a turnover of Rs 20 crore for the financial year ended March 31, 2004. It supplies about 60 per cent of its products to M&M.

This is the first company that Mahindra's auto component manufacturing venture "" Mahindra Systems and Automotive Technologies (MSAT), a recently formed wing "" has acquired.

Hemant Shapriya of Synergy Financial Services Pvt Ltd, advisors to Sar Auto for the deal, told this newspaper, "A new entity has been formed and Sar Auto will continue to be the holding company of the Virani group. It will take about a month for the transaction to be completed, but SAR Transmission will definitely be the first MSAT acquisition."

The tractor division, implements division and spares division of M&M, International Tractors Ltd, New Holland Tractors (I) Ltd, Concentric Pumps, Pune, and Kerala Automobiles Ltd, Trivandrum, are some of the main clients of Sar Auto.

While the tractors division of M&M accounts for 55 to 60 per cent of the company's turnover, between 12 to 15 per cent comes from International Tractors Ltd.

Exports account for about 20 per cent of the company's turnover.

Shapriya said if SAR Transmission is left with stocks after M&M's demand are, it will supply products to other companies that it has contracts with.

"This is only after the demands of M&M are met. Otherwise, those contracts will have to be terminated," Shapriya said.

Sar Auto manufactures auto components comprising gears, transmission shafts, couplings and power takeoff clutches. It produces more than 100,000 gears a month, conforming to German specification DIN 7 to DIN 9 class of accuracy. The company has three workshops, and is QS-9000 certified by TUV Suddeutschland.