CCI clears Bharat Forge’s acquisition of AAM India Manufacturing with voluntary structural modifications

What is the significance of the Bharat Forge–AAM India Manufacturing acquisition approval by CCI?

The Competition Commission of India has formally approved the acquisition of 100 percent equity shareholding of AAM India Manufacturing Corporation Private Limited by Bharat Forge Limited, subject to voluntary modifications. This regulatory nod marks a pivotal moment for Bharat Forge as it strengthens its footprint in the commercial vehicle axle manufacturing segment. The acquisition, which forms part of Bharat Forge’s broader strategy to consolidate its position across high-value automotive components, aligns with its global expansion agenda and ambition to cater to evolving mobility solutions.

AAM India Manufacturing, previously owned by American Axle & Manufacturing Holdings Inc., focuses on producing axles for commercial vehicles within India. The regulatory approval by CCI was contingent upon a series of voluntary commitments submitted by the acquiring party to mitigate concerns of potential market concentration, especially given Bharat Forge’s existing joint ventures with Meritor Heavy Vehicle Systems LLC, which itself was acquired by Cummins Inc. in 2022.

How is Bharat Forge positioned in the automotive and industrial components ecosystem?

Bharat Forge Limited is widely recognised as one of India’s foremost forging companies, with a diversified portfolio catering to sectors such as automotive, defence, aerospace, marine, construction, railways, and oil & gas. Known for supplying safety-critical and high-performance forged components, the company has expanded globally through both organic growth and strategic acquisitions. Its focus on innovation and advanced manufacturing technologies has enabled it to stay ahead in an increasingly electrified and sustainable automotive industry.

The company is part of the Kalyani Group and has built a reputation for engineering precision, having developed expertise in areas such as powertrain components, chassis parts, and structural systems. In recent years, Bharat Forge has accelerated its pivot toward EV-ready component manufacturing, including electric powertrain and lightweight structural solutions.

What were the structural changes made to AAM India Manufacturing before the acquisition?

Ahead of the transaction, AAM India Manufacturing underwent significant corporate restructuring. The target entity agreed to hive off several non-core operations to ensure compliance with Indian competition norms and streamline the core business that Bharat Forge sought to acquire. Specifically, its Pune Business Office—which handled captive IT and product engineering services—was separated and transferred to affiliates of American Axle & Manufacturing Holdings Inc. The components division that managed pass-through sales to other group entities was also excluded from the deal.

Additionally, the e-axle assembly lines currently situated within AAM Auto Component (India) Private Limited, another subsidiary of AAM Holdco, were planned to be transferred to AAM India Manufacturing. This restructuring ensures that Bharat Forge would acquire only the manufacturing-focused vertical, reducing overlap and mitigating antitrust risks.

What competition concerns prompted voluntary modifications in the deal?

The involvement of Bharat Forge’s promoters in joint ventures with Meritor HVS India Limited and Automotive Axles Limited created a potential conflict in terms of horizontal overlaps in axle production. Given that Meritor HVS and AAM India both operate in the commercial vehicle axle space, CCI closely examined the likelihood of reduced market competition following the acquisition.

To address these issues, Bharat Forge proposed voluntary modifications. These are typically structural or behavioural commitments that seek to preserve market competitiveness post-combination. While specific details of these remedies have not been publicly disclosed, such modifications usually include firewalls to prevent information sharing, restrictions on strategic decision-making overlaps, or divestments in overlapping product lines.

How does this acquisition fit within Bharat Forge’s strategic growth plans?

This acquisition is a strategic fit within Bharat Forge’s ongoing efforts to integrate vertically and expand horizontally in the automotive component supply chain. By absorbing the axle manufacturing capabilities of AAM India, Bharat Forge can broaden its commercial vehicle offerings, optimise production across facilities, and potentially increase its localisation quotient, which is critical for global OEM partnerships operating in India.

It also supports Bharat Forge’s ambition to become a comprehensive systems supplier in the axle and suspension segment. Given the ongoing transition toward electric and hybrid commercial vehicles, securing control over axle manufacturing positions the company to co-develop e-mobility driveline solutions and scale up R&D in EV-compatible platforms.

What is the market and investor response to this regulatory development?

On the trading day following CCI’s approval announcement, Bharat Forge’s stock registered a modest intraday gain of over 1 percent, indicating a cautiously optimistic sentiment among investors. However, the broader trajectory of the company’s stock remains subdued, with a month-on-month decline of over 8 percent and a six-month drop exceeding 20 percent, mirroring general market volatility and cyclical pressure in the auto component sector.

Sentiment among institutional investors is largely contingent on the company’s ability to successfully integrate the new entity without regulatory hiccups, while also realising synergy gains. Analysts are also watching for further commentary on the financial contours of the acquisition, which remain undisclosed.

How could the acquisition reshape India’s automotive supply landscape?

By securing control over a legacy axle manufacturer with significant domestic production capabilities, Bharat Forge has the opportunity to influence pricing, product development, and technology deployment across India’s commercial vehicle segment. The move could catalyse a phase of consolidation in India’s axle and driveline space, potentially inviting counter-moves by other Tier-I suppliers to safeguard market share.

Moreover, Bharat Forge’s emphasis on EV transition and lightweight component design could see it integrating these capabilities within the newly acquired operations. With OEMs placing increasing emphasis on local sourcing, cost efficiency, and advanced component designs, Bharat Forge’s acquisition could improve its value proposition as a preferred supply chain partner.

This deal also underscores a broader trend in the Indian manufacturing sector—where traditional engineering firms are transforming into end-to-end mobility solution providers, enabled by targeted acquisitions and technology partnerships.

As Bharat Forge now proceeds toward the implementation phase, industry stakeholders will be watching for operational milestones, capacity ramp-up, and regulatory compliance measures that will ultimately determine the success of this transformative transaction.