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Mahindra forays into electric cars with majority stake in Reva

Bangalore, May 26 (IANS) Amid growing world demand for alternative energy vehicles, India’s leading utility vehicles maker Mahindra & Mahindra Wednesday forayed into the electric car segment, acquiring a 55.2 percent majority stake in Reva Electric Car Co Ltd.

The strategic deal for an unspecified amount includes a fresh equity infusion of Rs.45 crore (Rs.450 million/$10 million) by Mahindra into the Bangalore-based Reva.

‘The buyout makes the Mahindra group a global player in the electric vehicle space, in which Reva is a leader with 3,500 units in use the world over,’ said Pawan Goenka, Mahindra president for automotive and farm equipment sectors.

Though Mahindra is a listed firm on the Indian bourses, it has not disclosed the value of the stake, including premium, if any paid to the Maini family of Reva for the majority stake.

‘We are not in a position to disclose the value of shares bought from Reva for majority stake,’ Goenka told IANS here.

By virtue of the majority stake, Mahindra takes management control of Reva, with Goenka as the new chairman and four more of its directors joining the re-constituted board.

Promoters Sandeep Maini and Chetan Maini, who were chairman and deputy chairman of Reva till Tuesday, will continue on the board as directors, with the Maini group holding 31 percent equity stake in the company.

Chetan Maini will also continue to play a leading role as chief of technology and strategy of the revamped company.

AEV LLC of California, the joint venture partner, will have 11 percent stake and its nominee Lindal Bull will also be on the Reva board. An independent director will join the board subsequently.

With a paid-up capital of Rs.20 crore, the decade-old Reva has an authorised capital of Rs.135 crore and no debt burden.

Post-acquisition, Reva will become a subsidiary of the $6.3-billion Mahindra group and renamed Mahindra Reva Electric Vehicle Co. Ltd after approval by the government and regulatory agencies.

Prior to the take-over, US-based investors Global Environment Fund and Draper Fisher Jurvetson, which invested in Reva along with AEV, exited the company by off-loading their stakes to the promoters for an unspecified amount.

Reva sold about 400 units of its electric car in fiscal 2009-10, with a majority of them in western markets, in Britain, German and Spain.

‘We will leverage the domain expertise of Reva in electric vehicle technology to enhance the performance of our electric three-wheeler Bijlee and an electric version of mini-truck Maxximo,’ said Goenka.

Mahindra, which has been working on developing green technologies and demonstrated diesel hybrid technology on its utility vehicle Scorpio and hydrogen Alfa three wheelers, has a pilot fleet operating with 100 percent bio-diesel.

‘Reva’s electric vehicle technology will be adapted for three-wheeler and other Mahindra vehicles,’ Goenka added.

The fresh capital infusion will enable Reva to expand its installed production capacity to about 30,000 units per annum in phases from existing 6,000 units.

The acquisition will also enable Mahindra to launch the premier next generation electric car models – NXR and NXG and expand its presence in the market for electric cars with Reva’s NXR and NXG.

According to industry estimates, the electric vehicles will witness a steady growth in the domestic as well as overseas market in the coming decade, thanks to increasing awareness about global warming, climate change, carbon footprint and gradual reduction in fossil fuel reserves.

‘We are targetting about 80,000 units per annum in the Indian sub-continent by 2020 when about 1.5-2 million electric vehicles will be on road in the next decade the world over through our wide distribution network,’ Goenka noted.

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