Pininfarina, the design and engineering company acquired by the Mahindra Group in late 2015, has turned around ahead of schedule. That has prompted Pininfarina to scout for acquisitions in the US and Europe as it aims to accelerate growth and achieve, in alliance with its controlling partner Tech Mahindra NSE -0.73 %, a billion-dollar business target in the coming 3-4 years.
Pininfarina’s global CEO Silvio Pietro Angori told ET that the demand for cleaner electric and hybrid vehicles puts the company in a sweet spot, and Pininfarina is now looking at tripling the business, against the earlier target of twice the erstwhile revenue when Mahindra NSE 1.18 % had come on board.
“When we were up for sale, we were not getting long-term contracts. Once Mahindra came on board, not only are we getting longterm contracts but also repeat orders from multiple customers,” Angori said.
The company has delivered seven quarters of positive financial performance, with growth in excess of 15%. But Angori said the company wants to grow faster and ‘acquire someone’.
“We can continue to grow at 20%, but we want much more. As we are back on the growth path, we can use conventional levers as well as financial levers. We have shareholders who are suggesting we grow. We can go through various means — internal accruals, debt, equity. Our debt equity ratio is below 0.5,” added Angori.
The company believes it has a very limited presence in the US and hence it is a market for Pininfarina to look for acquisitions. “We are assessing the opportunities for extension of the service portfolio and regional footprint, complementary with what we do today,” explained Angori.
About 76% of Pininfarina is owned jointly by Tech Mahindra and Mahindra & Mahindra, which hold the ownership in a 60:40 ratio. The balance 24% is in the open market.
The vehicle sales and manufacturing company Automobili Pininfarina is 100% owned by Mahindra & Mahindra and it deals with Pininfarina AG as one of its clients on arms-length basis.
On its own, Pininfarina catered to about 120 clients. With the support of Tech Mahindra, Pininfarina can easily service more than 1,000 clients. A couple of years ago, both Tech Mahindra and Pininfarina’s engineering and services company combined generated revenues of about $500 million.
Hybrid and electric vehicles accounted for 20-30% of its business a few years ago. Today, the company has about 80% of its business coming from this segment.
Source: Economic Times