June 17, 2013: The Mahindra Group and CIE Automotive SA of Spain have signed a global alliance agreement between Mahindra's automotive component businesses (held under its Systech Sector) and CIE Automotive (involving also its subsidiary Autometal).

The agreement will see the formation of a global automotive component supply network with combined annual sales of approximately Rs 15,000 crore with operations spread over North and Latin America, Europe and Asia held through listed businesses in Spain, Brazil and India.

As part of the transaction, CIE Automotive -- through one of its subsidiaries -- will acquire from Mahindra Group a stake in its listed and unlisted companies belonging to Systech Automotive Component business and CIE Automotive will contribute its forging businesses in Spain and Lithuania and together consolidate all companies under Mahindra Forgings which will be rechristened Mahindra CIE.

According to the official statement, the transaction will be carried out in a series of steps over the next year that will culminate in:

• M&M taking a stake of 13.5 percent in CIE Automotive, which is listed in Spain making it the second largest shareholder in CIE. M&M will nominate two directors on CIE’s board.

• CIE Automotive taking a majority stake in a single listed entity in India which will continue to operate the current Systech automotive component businesses globally and include CIE's European forgings operations.

"Eight years ago, we set out to build an Indian automotive supplier with a global footprint and this drove a series of acquisitions in India and Europe,” said Anand Mahindra, chairman of the Mahindra Group and MD, M&M. Anton Pradera, chairman of CIE Automotive, said, "CIE's leadership and shareholders have a strategy to develop India as the gateway to the Asian market. In Mahindra, we found a partner that has a multi-technology portfolio similar to ours.”

Jesus Maria Herrera, CEO of CIE Automotive and chairman of Autometal, said: “CIE's focus on growth with operational excellence is a value shared with Mahindra and we join hands to become a bigger and better supplier.” Hemant Luthra, president, Mahindra's Systech Sector, said the alliance with CIE dwarfs everything done in the past and marks the next bold step towards global supplier consolidation.”

Mahindra Systech’s component portfolio includes castings, forgings, stampings, gears, magnetic products and composites. It comprises MFL, Mahindra Ugine Steel, Mahindra Composites, Mahindra Hinoday Industries and Mahindra Gears.