Mahindra & Mahindra Ltd., India’s largest sport-utility vehicle maker, may back Sicilian financier Simone Cimino’s plan to convert Fiat SpA’s Termini Imerese car factory to production of electric vehicles.
Cimino, who’s planning to invest as much as 450 million euros ($602 million), has a preliminary agreement with Reva Electric Car Co. to build electric cars at Termini, he said in an interview. Mahindra in May agreed to buy 55 percent of Reva, a closely held company based in Bangalore, India.
Fiat plans to stop production at the unprofitable factory, which employs 1,400 people in Sicily and assembles the Lancia Ypsilon model, by the end of 2011. The Turin, Italy-based carmaker loses 1,000 euros on every car produced at the plant, partly due to a lack of infrastructure and the high cost of shipping parts to the island.
“We have the financial strength to develop the plant and absorb the workforce,” Cimino, 49, said by phone yesterday. Private-equity funds that he manages may contribute as much as 100 million euros to the project.
Pawan Goenka, president of Mahindra’s automotive and farm- equipment unit, said he’s had “positive discussions” with Cimino and that a plan for the Sicilian factory was part of the talks.
“We like his proposal,” Goenka said, adding that “it is still at a very preliminary stage.”
Invitalia SpA, an adviser to Italy’s Industry Ministry, plans to announce a shortlist of bidders for the Termini plant today. The Italian government also plans to meet union officials and Fiat representatives today in Rome for an update on the situation. The Termini plant was built in 1970 in one of the poorest regions of the country.
Taking Fiat’s Place
“We don’t think these projects are strong enough to take the place of Fiat and maintain the current workforce,” said Roberto Mastrosimone, an official for the FIOM labor union. “We’re ready to listen to their proposals.”
Fiat plans to invest 20 billion euros through 2014 to improve factories and vehicle development in Italy, where productivity lags its plants in Brazil and Poland. Chief Executive Officer Sergio Marchionne wants to lift production in Fiat’s home market to as many as 1.4 million passengers cars a year by 2014. The company is Italy’s biggest manufacturer.
Cimino, a former Montedison SpA executive, is CEO of private-equity fund Cape Natixis Sgr SpA. His project, which could involve as much as 900 million euros in total investments, calls for developing electric cars and solar-recharge capability in Sicily. Cimino said he may hire up to 3,500 people, including workers from the Fiat plant.
