The Rs 18,000 crore auto major, Mahindra & Mahindra (M&M) is planning to acquire 51% stake in Hyderabad-based Lokesh Machines, reports DNA. Lokesh Machines, the India’s biggest engine-block manufacturer registered a turnover of Rs 113 crore in the last fiscal.

With this acquisition, M&M will get an assured and captive supply of cylinder blocks and engine heads for jeeps, tractors and the Scorpio utility vehicle. At present, Lokesh supplies about 0.23 million engine blocks for M&M`s vehicles, which constitutes around 35% of its total business.

Buying Lokesh, which had a turnover of Rs 113 crore last fiscal, will give M&M an assured and captive supply of cylinder blocks and engine heads for jeeps, tractors and the Scorpio utility vehicle. Lokesh supplies about 2.3 lakh engine blocks for M&M’s vehicles, which constitutes 35% of its business.

M&M’s move throws up a few imponderables considering that Lokeshwara Rao, along with former Hyundai Motor India president B V R Subbu, have floated an automotive venture called MLR Motors.

MLR is setting up a Rs 1,250 crore plant at Medchel near here to manufacture passenger cars and commercial vehicles that would ultimately compete with M&M’s own products.

For M&M, the move would be in line with the sales target set for Systech, its aggressively expanding auto component division — of $ 1 billion by 2010, or a 33% increase over current revenues. Such a goal, said Citigroup in a recent report, would be possible more through acquisitions than the organic route.