Mumbai, June 15 (IANS) Diversified Indian conglomerate Mahindra Group Saturday entered into a global alliance agreement with Spain-based component manufacturer CIE Automotive to form a new company, Mahindra CIE.
"Eight years ago, we at Mahindra set out to build an Indian automotive supplier with a global footprint and this drove a series of acquisitions in India and Europe for us," Anand Mahindra, chairman, Mahindra Group, said in a statement.
"This grand alliance with CIE enables us to "rise" above competition, quickly extends our reach into new geographies, and grow our collective product portfolio in the coming years."
According to the statement, the new company will have a combined annual sales of approximately Rs. 15,000 crore (Euro 2.2 billion) with operations in North America, South America, Europe and Asia held through listed businesses in Spain, Brazil and India.
"The proposed business 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," the statement said.
"CIE Automotive taking a majority stake in a single listed entity in India which will continue to operate in the component businesses and include CIE's European forgings operations."
Mahindra will buy the stake in component manufacturer for 96.24 million euros (Rs.738.45 crore) at a price of 6 eurosper share. On the other hand CIE will take stakes in the systech automotive component companies of the Mahindra Group like Mahindra Forgings, Mahindra Ugine Steel, Mahindra Composites, Mahindra Hinoday Industries and Mahindra Gears.
The CIE Automotive is headquartered in Bilbao, Spain and focuses on three strategic business areas of automotive components, biofuels and providing technological solutions and services.
The company is listed on the Madrid and Bilbao stock exchanges and has presence in 15 countries with sales of 1.65 billion euros.
The company had reported a slowdown in its turnover for the first quarter of 2013, the consolidated turnover stood at 418 million euros (down 2.6 percent).
Net profit for the period under review reached 17 million euros, which was slightly lower than the like period of last year, which the company said was caused mainly due to fluctuations in exchange rates.
On the other hand Mahindra and Mahindra which is a part of $16.2 billion Mahindra Group is a large Indian conglomerate with interests in automobile, information technology and a host of other industries.