M&M may set up aircraft financing arm in Australia

Bangalore: Mahindra & Mahindra (M&M), the diversified business group with significant interest in automotive and information technology (IT), is looking at setting up an aircraft financing arm in Australia to boost the sale of aircraft being manufactured by Gippsland Aeronautics, which is now part of the Mahindra group.
The over-$6.3 billion diversified business group is mulling to use its non-banking financial arm Mahindra & Mahindra Financial Services (Mahindra Finance) to set up an independent or partly-owned financial services entity in Australia to finance the customers who want to buy aircraft built by Australian aircraft producer Gippsland Aeronautics that is part of Mahindra Aerospace.
In December last year, M&M, along with Kotak Private Equity, had acquired two Australian companies, including Gippsland Aeronautics and aerospace component maker Aerostaff Australia. These acquisitions were made by its under-subsidiary Mahindra Aerospace with a total commitment of $37.4 million over the next five years.
“Most aircraft in the world are financed by a financing company. Now that Mahindra Finance exists in India and helps the sale of tractors and SUVs, it is possible that Mahindra Finance can look at setting up something in Australia independently or as a minority or as a majority,” said Hemant Luthra, president of Mahindra Systech, which looks after the aviation business of the company.
Gippsland, which produces two- to 20-seater aircraft, has sold 250 of its aircraft in 32 countries, a majority of them in Australia. M&M believes with a financing arm in place, the orderbook of Gippsland will improve dramatically, as easy finances can be made available to the customers.
29/06/10 Bibhu Ranjan Mishra/Business Standard

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Categories: Foreign Jun 2010, Indian Aviation- In General Jun 2010, New Jun 2010