M&M plans to make aircraft, components in India

Mahindra & Mahindra is planning to invest Rs 250 crore (Rs 2.50 billion) in the aerospace business. It plans to set up component and aircraft manufacturing facilities in India, Mahindra Group vice chairman & managing director Anand Mahindra said in Bengaluru.

"We are planning to invest Rs 150 crore (Rs 1.50 billion) for manufacturing components and roughly Rs 100 crore (Rs 1 billion) for manufacturing aircraft," he said.

Mahindra & Mahindra, which has interests in automobiles, information technology and finance, had entered the aerospace sector in December last year when it , along with Kotak Private Equity, acquired two Australian companies: Aerospace component maker Aerostaff Australia and aircraft maker Gippsland Aeronautics.

Gippsland, which produces 2- to 20-seater aircraft, is certified to sell in 31 countries across the globe. So far, about 250 of its aircraft are flying in various parts of the world.

Mahindra Group had earlier announced to set up a plant for aerospace component manufacturing at Malur in Karnataka with an investment of about Rs 40 crore (Rs 400 million).

Mahindra Aerospace had acquired about five acres for this purpose. However, the company now thinks that the land it acquired for the purpose will not be enough for setting up the plant, given the encouraging response from customers.

"We have land in Malur which is about five acres. We have been encouraged by the Tier-1 component makers and original equipment manufacturers to quadruple the size of that facility because they think there is going to be enough demand. Therefore what we are looking for now is at least 20 acres of land," Mahindra Systech president Hemant Luthra said. Mahindra Systech is the division of Mahindra Group which looks after components and engineering services.

Luthra said the company was hopeful of finding an appropriate location in Karnataka with the support of the state government. To a query if the company would locate its facility at the proposed aerospace special economic zone near the Devanahalli international airport in Bengaluru, Luthra said: "The aerospace SEZ is still in the early stages, and we are in a lot of hurry. We are trying to understand from the Karnataka government what else is available."

Mahindra & Mahindra is also looking at inorganic growth opportunities in the sector. "Given the scale of our ambition and our impatience, I would not be surprised if we pursue more in inorganic opportunities," said Mahindra.

He, however, said the strategy now was to consolidate the business, before making any fresh acquisitions. "I think it is appropriate to say that at this point in time we need to consolidate what we have acquired and ensure that they meet their expectations both from a market point of view and a financial point of view," he added.