Hi fellow investor,
( Disclosure: I own shares of Mahindra CIE Ltd and hence my views maybe biased. Everything I conclude in the article is solely my opinion, based on publicly available information. This should not be taken as financial advice. This is purely for educational purpose.)
Let’s get straight into it.
Short History, to start with!
Mahindra CIE Ltd was formed in 2014, after an alliance was structured in between CIE Automotive Ltd and Mahindra & Mahindra Ltd. In the deal, CIE bought shareholding stakes in Mahindra ancillary companies ( Mahindra Forgings, Mahindra Hinoday and Mahindra Composites), and these ancillary companies ( and some others) were merged into Mahindra Forging, which was renamed Mahindra CIE (MCIE). CIE also merged its European forging companies into MCIE. Mahindra, in exchange, bought a 13.8% stake in CIE Automotive, becoming its second largest shareholder. In the final entity (MCIE), CIE had a 53% stake (now increased to 60%) and M&M had 20% stake (now down to 11%).
This alliance was seen as a win-win for both CIE and M&M. M&M got a major European player in the automobile space as a partner, with ability to turnaround its flailing European operations as well as its technology and operational might, and on the other hand CIE got to enter the South Asia market.
Current Structure-
MCIE has 31 manufacturing facilities including 8 manufacturing facilities in Europe and 1 in Mexico. In India, the standalone entity supplies components to the light vehicles segment, two wheelers, tractors, medium and heavy commercial vehicles. MCIE has 4 major subsidiaries-
CIE Galfor- Situated in Spain, Galfor produces parts and components through forgings for the passenger vehicle industry. It is also the holding entity for MCIE in Europe and houses the other European businesses-
UAB CIE LT- Situated in Lithuania, producing crankshafts for the passenger vehicle industry.
CIE Legazpi- Situated in Spain, producing pressed and forged transmission components for the passenger vehicle industry.
Mahindra Forging Europe (MFE)- situated in Germany, has 3 plants producing drop forged components like axle beams for M&HCV industry.
Metalcastello- Situated in Italy, produces gears and shafts for the off highway vehicle segment (Tractors, Earthmoving Equipments etc.)
Bill Forge Precision Pvt Ltd- This is a small entity located in Coimbatore, supplying precision machinery and components to Hero Motors. The entity was acquired along with the parent- Bill Forge Pvt Ltd in 2016, but Bill Forge was amalgamated into the standalone entity in 2018.
Bill Forge de Mexico- This entity was setup in Mexico, in 2017. It has an automated machining plant to supply forged and machined components. It was setup to supply components for the Ford F 150 trucks to GKN Driveline. It has 2 big projects from GKN Driveline and Nexteer Automotive.
Aurangabad Electrical Ltd (AEL)- MCIE acquired AEL in 2019, for INR 8,759 million. AEL is in the business of manufacturing automobile brake system components which includes aluminium die casting components.