Mahindra CIE acquires Bengaluru-based forging firm

Indo-Spanish automotive component supplier, Mahindra CIE Automotive, has announced the 100 per cent acquisition of Bengaluru-based forging company Bill Forge for Rs 1,331 crore.

Founded in 1982, Bill Forge is a precision forging company having six manufacturing facilities in India with a seventh plant coming up in Mexico. The company is Tier I supplier two and four-wheeler companies including Yamaha, TVS, Honda, Ford, Maruti Suzuki, Bajaj Auto to name a few.

A preferential allotment of 31.99 million equity shares to shareholders of Bill Forge at Rs 200/share (Rs 639 crore) will be made while a preferential allotment of 22.5 million equity share to PIA2 (subsidiary of CIE) at Rs 200/share (Rs 450 crore) will also be made.

MCIE Board also resolved to raise funds upto Rs 700 crore through issue of equity / convertible / equity linked securities including by way of qualified institutional placement, the company said in a statement today.

Private equity company Kedaara Capital in amongst the investors in Bill Forge. While the exact stake held by the PE company was not disclosed, it is believed to have invested Rs 300 crore into the forging firm, according to media reports.

As of last financial year, the unlisted Bill Forge reported a turnover of Rs 582 crore and a net profit of Rs 51 crore. It also has a net debt of Rs 75 crore, as per disclosures made by Mahindra CIE Automotive (MCIE).

The acquisition is proposed to be completed by end of the next month. The takeover will mark MCIE's entry into cold/warm forgings while leading to diversification and enhancing product mix.

Bill Forge makes steering races and engine valve retainers for two-wheelers and constant velocity joints, tulips, steering shafts, steering yokes and wheel hubs for passenger cars.

The buyout will 'address the south region and give entry into the north region. Currently MCIE caters largely to vehicle maker based in the western region. It also provides an entry into the two-wheeler space'.

Mahindra CIE, is a joint venture between Mahindra Group and CIE of Spain which manufactures engine and chassis forged components for commercial and passenger vehicles. Mahindra Vehicle Manufacturers, a Mahindra Group company holds about 20 per cent in the JV.

In a separate development Pedro Jesus Echegaray Larrea tendered his resignation from the post of executive director of MCIE with effect from today. It also appointed Ander Arenaza Alvare as additional director of the company.