The Indian automotive components sector is seeing a flurry of M&A activity as major players seek to plug gaps in their portfolios amid the challenges and opportunities opened up by technological shifts.
06 Mar 2025 | 1396 Views | By Shahkar Abidi
India’s automotive component industry is undergoing a transformation, driven by an unprecedented wave of mergers, acquisitions and private equity (PE) investments. From legacy players consolidating their market positions to global investors betting big on the sector’s long-term growth, the industry is seeing a flurry of strategic deals aiming to enhance ...
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India’s automotive component industry is undergoing a transformation, driven by an unprecedented wave of mergers, acquisitions and private equity (PE) investments. From legacy players consolidating their market positions to global investors betting big on the sector’s long-term growth, the industry is seeing a flurry of strategic deals aiming to enhance competitiveness, expand capabilities, meet regulatory requirements and cater to the growing demand for electric vehicles (EVs) and other alternate fuel solutions.
The development comes in the wake of rapid technological changes such as electrification, the emergence of SDVs and connected vehicle technologies. To stay relevant, the major players are entering newer areas such as battery management systems, charging infrastructure, power electronics and more.
Similarly, as connected vehicles and smart mobility gain relevance, the need for integrating artificial intelligence and software-driven solutions has grown, driving more collaboration between component manufacturers and technology-focused entities.
While comprehensive data on recent deal activity remains elusive, an October 2024 report from Grant Thornton Bharat LLP offers a compelling snapshot: in Q3 2024, deal volumes rose by 14%, with 32 transactions, while total deal values surged by a staggering 290%—a striking indicator of the sector’s strategic realignment.
Jugnu Sakuja, Managing Director at Alvarez & Marsal’s Business Transformation Services, sees a flurry of activity on the horizon. Sakuja is actively engaged in discussions surrounding four to five assets that are currently exploring M&A opportunities. “Several deals are set to be announced,” he notes, estimating that eight to twelve transactions are currently under discussion. Many of these, he believes, could materialise within the next six to twelve months.
He explained that most of these transactions are expected to fall within the range of $100 million to $300 million. Private equity firms looking to acquire majority stakes in target companies often have a broader strategy in mind. Their goal, he says, is to consolidate and scale these deals, ultimately building businesses that generate around $1 billion in revenue.
"The idea is to create billiondollar platforms and then go for public markets," he noted. Additionally, he pointed out that, at present, the Indian automotive component sector has very few companies that have reached the billion-dollar mark.
For Srikumar K, Senior Vice President and Co-Group Head of Corporate Ratings at ICRA Ltd., these developments reflect a remarkable structural shift. “Amidst changing emission norms, global vendor diversification opportunities, and the emergence of alternative fuel technologies (like EVs, CNG and hybrids) traditional component makers are constrained to look beyond their core service offerings to stay relevant,” he explains. "The trend is expected to continue over the near to medium with the auto industry undergoing significant transformation," Srikumar noted.
He further added that beyond these factors, the China plus one strategy—which seeks to diversify supply chains beyond China—has introduced another compelling dimension to the consolidation wave. Another factor has been the widespread disruption caused by the COVID-19 pandemic.
As margins shrank and costs spiraled due to disrupted supply chains and plummeting demand, consolidation became a logical choice for many players. More traditional considerations, such as achieving synergistic benefits and supply chain management also played a part in increased consolidation.
Big Moves
Characterised by multi-billiondollar revenue targets, strategic acquisitions, and technologydriven partnerships, companies like Anand Group, Minda Corp, Lumax Autotech, Bosch, and Schaeffler are not just scaling up—they are reshaping the industry’s future through aggressive investments, joint ventures, and a relentless focus on innovation.
For example, Anand Group has set an ambitious target of taking its revenue to Rs 50,000 crore by 2030 from Rs 19,000 crore. A key driver of this growth will be M&A and partnerships designed to bridge technology gaps and venture into newer areas. Anjali Singh, Chairman of Anand Group, said announcements in this regard are likely in 2025 itself, and such moves would contribute meaningfully to the group’s growth targets for 2027 and 2030.
Given that organic growth is expected to take the company’s revenue to around Rs 35,000 crore by 2030, the company is banking on JVs and acquisitions to deliver the rest. Another key player following an acquisitive strategy is Minda Corp. After witnessing a decline in its revenue from Rs 3,127.5 crore in FY2019 to Rs 2,401.1 crore in FY2021, the company adopted an M&A-driven growth strategy.
The autoparts maker has set a goal of reaching $3 billion (Rs 26,000 crore) in revenue by 2030, with a stipulation that no single segment shall contribute more than 30% of its revenues. Over the past two years, it has executed seven to eight strategic deals, including a Rs 1,372 crore acquisition of a 49% stake in Flash Electronics.
Minda Corp’s acquisition strategy focuses on potential targets with revenue above Rs 150 crore along with healthy EBITDA, with a preference for EV and engine-agnostic businesses while avoiding sectors like cast glasses and sheet metal. "There is a lot of opportunity when it comes to the cross selling," noted Aakash Minda, the Executive Director of Minda Corp.
Similarly, Lumax Autotech is another player with an aggressive growth plan, targeting $1 billion (Rs 8,700 crore) in revenue by 2030. The company will depend on a mix of organic and inorganic expansion, and aims to take revenue from joint ventures from 30% to over 60% by 2030. CEO Vikas Marwah emphasised that Lumax’s approach is not about outright takeovers but securing a majority stake (typically above 60%) while allowing operational independence to the acquired unit.
When it comes to mergers and acquisitions, global suppliers are also not keen to be left behind. For instance, Germany-based Bosch Ltd is today more open to partnerships to navigate the shift towards electrification and software-defined vehicles (SDVs). Sandeep Nelamangala, Joint MD of Bosch Ltd and President, Bosch Mobility India, pointed to the V2X (vehicle-to-everything) communication space as a key area of potential collaboration.
According to him, Bosch is no longer trying to build every technology in-house, and is keen to enter partnerships in areas such as: electrification, compute, cross-domain software services and cognitive solutions. In the same way, Bosch has entered into collaborations with banks and accounting software providers—a shift from traditional automotive alliances– for its logistics operating system.
Meanwhile, rival Schaeffler India recently acquired Vitesco Technologies in a strategic step towards solidifying its electric two-wheeler component business. Harsha Kadam, MD & CEO of Schaeffler India, said functional integration of the operations is underway. The move is expected to enhance Schaeffler’s content per vehicle in the EV segment. He called the transition from component supplier to system-level solutions a “game changer”.
Interestingly, not all such activity is taking place around industry heavyweights. Some of it is being catalysed by external agents, such as private equity funds. A recent example is U.S. investment giant Carlyle Group’s first foray into India’s auto components space, taking a controlling stake in a newly merged entity formed by the combination of Highway Industries and Roop Automotives.
The deal is reportedly valued at around $400 million, making it one of the largest PE transactions in the sector. Similarly, Bain Capital acquired a minority stake in Maharashtra-based Dhoot Transmission Group, closely following its September 2024 investment in RSB Transmission.
The developments should be seen in the context of the opportunity in front of the Indian auto component industry. ICRA estimates the auto component industry to incur a capex of Rs 25,000-30,000 crore in FY2026 towards capacity expansion, localisation/capability development and technological advancement (including EVs), among others. Currently, only 30-40% of the EV supply chain is localised.
There has been substantial localisation in traction motors, control units and battery management systems over the years, while battery cells, which constitute 35-40% of vehicle cost, are still entirely imported. The relatively low localisation level gives rise to manufacturing opportunities for domestic auto component suppliers.
Demand from domestic original equipment manufacturers (OEMs), accounting for over half of industry revenue, is estimated to grow by 7-9% in FY25 and 8-10% in FY2026. Part of the growth would stem from premiumisation of components and higher value addition.
Growth in replacement demand is pegged at 5-7% in FY2025 and 7-9% in FY2026, driven by an increase in vehicle parc, higher average age of vehicles/used car purchases, preventive maintenance and growth in organised spare parts, among other reasons, ICRA explained in its latest presentation.
Benefits of M&A
Mergers and acquisitions (M&A) have played a crucial role in shaping the Indian automotive components industry, drawing significant research interest. One notable study, published in 2020 by Anjala Kalsie and Neha Singh, examined 120 major Indian M&A deals between 2005 and 2015, including those within the automotive components sector. Their findings highlighted that horizontal mergers often resulted in substantial synergies and enhanced financial performance, particularly when transactions were conducted in cash.
Further research by Radhe Shyam Ojha, Vineet Kumar, and Sudesh Singh reinforced the benefits of M&A in the industry. Their study revealed that such deals could drive improvements in productivity and quality. A striking example was an Indo-Japanese auto-component manufacturing company that successfully implemented 5S practices—an approach focused on workplace organisation and efficiency.
However, as history indicates, not all synergies generated turn out to be positive. One such case has been Amtek Auto, which was once counted among the biggest names in the Indian automotive component industry. It went on an acquisition spree in order to expand its customer base and capacities before itself getting into a financial crisis.
However, as innovation cycles shorten and global competition intensifies, for many firms M&A is no longer a strategic luxury but a necessity, serving as a vehicle for expanding market reach, achieving operational synergies, securing technological capabilities, and mitigating geopolitical risks.