MAHINDRA and Mahindra (M&M) on Friday said it plans to restructure its six auto-component companies to form an umbrella company, Systech, before going for an initial public offering.
The six companies are Mahindra Engineering, Mahindra Sourcing, Mahindra Forging, Mahindra Gears, Mahindra Composites and Mahindra Steel Products. Under the restructure plan, the six businesses would be brought under a new company, company president (Systems & Technologies Sector) Hemant Luthra said. Presently, Systech manages these six businesses of which three are listed.
“The new company will be called Systech,” Mr Luthra said.
Mahindra Composites, Mahindra Forging and Mahindra Ugine Steel Company are listed.
Promoters in the listed companies hold 45.06%, 47.11% and 55.53% in Mahindra Composites, Mahindra Forging and Mahindra Ugine Steel Company, respectively.
In the unlisted companies, promoters hold virtually the entire stake. “Now, what you have to do is transfer all the holdings of companies managed by Systech. You have to take the holding from Mahindra and create a new company called Systech,” he said. Systech would hit the capital markets at a later date, but “certainly not this year”, Mr Luthra said.
“In order to provide an avenue for interested investors to take advantage of Systech’s portfolio, it might make sense to list Systech,”he added.
By the time restructuring takes place, M&M would have completed its investment of Rs 800 crore in its various auto-component businesses.