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 Mahindra has entered the aerospace business with the ac-quisition of two companies in Australia—Aerostaff Aus-tralia and Gippsland Aeronautics. Having acquired a 71.5 per cent stake in these companies, the transaction catapults Mahindra into the global aerospace and general aviation markets. The acquisitions, done jointly by Mahindra with Kotak Private Equity, amounts to an investment of Rs175 crore approximately. Part of this investment, according to Hemant Luthra, President of Mahindra Systech, would be going into the building of the companies over a period of time.
Of the two companies, Aerostaff Australia is a manufacturer of high precision, close tolerance aircraft components and assemblies for large aerospace OEMs. Gippsland Aeronautics is a manufacturer of aeroplanes, and has so far delivered more than 200 FAR 23 certified planes in 32 countries. The FAR 32 certification is mandatory for carrying fare paying passengers and signifies the highest level of passenger safety. Expected to make it easy for Mahindra to explore new markets, Gippsland, as part of Mahindra Aerospace post acquisition, operates in the two to twenty-seater turbo-prop market. Retaining the managements of both the companies, Luthra avvered that the product portfolio of Gippsland Aviation complements the NM5, which is being jointly developed by Mahindra with the National Aeonautics Laboratory (NAL), another first in public-private partnership. Eying revenues of US$ 150 million annually in the next five years from the aerospace component business, Mahindra is setting up a plant in Bangalore to provide dual shoring cost benefits to customers. Announcing that his company hopes to reduce costs of developing newer variants by using its experience in aerospace designing, Hemant Luthra, said, “components duplicated here would be part of a greater synergy, and would roughly cost 30 to 40 per cent less”.
 With the NM5 prototypes expected to start flying at the end of this fiscal, the joint venture with NAL reflects Mahindra's abilities to design a plane from scratch. Announcing that Mahindra is keen on taping the aeropsace business worth Rs 650 crore, Luthra mentioned that the company could be looking at the general aviation industry for manufacturing outsourcing, and also for components. Stating that MAPL could actually end up building aircrafts for others and co-brand them, Hemant Luthra added that Mahindra would hold 55-60 per cent in the consolidated entity and the consolidation is likely to happen in less than 3 years time. “We have already done the consolidation at the operational level; however at the financial level it will take some time. MAPL will remain as a separate entity as it is still at a nascent stage”, he added. Mahindra Systech, according to Mahindra sources, plans to consolidate its auto component units into a single entity – companies like Mahindra Forgings, Mahindra Composites, Mahindra Castings, Mahindra Gears and Mahindra Ugine.
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