Mahindra acquires majority stake in DGP Hinoday Industries

Mahindra & Mahindra Ltd on November 24, 2006 has announced that it had entered into a agreement to acquire 66% equity stake in DGP Hinoday Industries Ltd (Hinoday). The Company shall acquire the shares from the existing shareholders, DG Piramal Group and India Private Equity Fund Mauritius. Hitachi Metals holds the balance 34% equity stake.

Hinoday, based out of Pune, had commenced its operations in 1963. Hinoday is a market leader in its two business segments, Casting and Ferrites. The SG Iron Casting Division is a renowned manufacturer of cast products like crankshafts, rear axle, turbo charger, differential gear housings and brackets. The current capacity of the Casting Division is around 24,000 tonnes per annum, that is currently in the process of being expanded to 44,000 tpa. Hinoday is the largest, and technologically the most advanced manufacturer of hard and soft ferrites in India. It specializes in auto and other high end niche applications, with a capacity close to 6,000 tpa. Hinoday exports over 28% of its total sales.

The acquisition of the majority stake marks the entry of the Company into the sophisticated SG Iron casting space. The Company will leverage DGP Hinoday's expertise in SG Iron as a platform to help grow into one of the leading casting players in the country. The Company also sees strong growth potential in the ferrites segment. The high quality management team of Hinoday will continue to lead the Company and the Company looks forward to integrating them into the Systech strategy.

Mr. Anand Mahindra, Managing Director and Vice Chairman, of the Company stated, "The DGP Hinoday acquisition is integral to Systech's strategy of providing a one-stop-shop for sophisticated, high-end engineered products like forgings and castings, leveraging India's intellectual capital & low cost high quality manufacturing strengths".

ICICI Securities was the Sole Advisor to the Company for the transaction.

Source : Equity Bulls

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