M&M severes business ties with Lokesh Machines over U.S. sanctions

In India, Lokesh Machines is the first private firm to manufacture and supply small arms to elite forces like the Indian Army, NSG, Assam Rifles, and BSF. Representational file image.
| Photo Credit: ANI

Mahindra and Mahindra (M&M) has decided to discontinue sourcing of auto components from Lokesh Machines in the wake of the supplier figuring in the United States Department of the Treasury’s OFAC sanctions list.

“We have received communication from one of our customers regarding discontinuance of transactions owing to the fact that while there are ongoing efforts towards delisting from United States Department of the Treasury’s OFAC sanctions list, the timeline for this process is not suitable for the customer,” machine tools and small arms maker Lokesh Machines said on Saturday.

The move of M&M is expected to impact around 8% of total revenue, compared with the previous financial year. The company is, however, determined to add other customers to compensate for the loss of business resulting from the development and remains optimistic about achieving this goal particularly given its recent defence foray, the Hyderabad-based firm said in a filing.

Machine tools and auto components and defence divisions are two business segments of the company.

As part of the auto components business, it manufactures cylinder blocks, cylinder heads, connecting rods and forgings. The company operates through five manufacturing units in Hyderabad and 1 in Pune.

Following the October 30 sanctions list, in which its name figured with a clutch of other entities from India, Lokesh Machines said it was in the process of reaching out to the OFAC, after becoming aware through media reports, to gather more information and provide clarifications, including that it has been exporting machines to Russia since 2011.

“Our machines are being sourced by distributors who stock these or further sell. None of our distributors are featured on any sanctions list.

The news articles stated we have been sanctioned for supplying Russia with technology and equipment that could be used for military operations. It must be noted that we are not aware of any machines being used or dealt with any sanctioned entities or individuals,” the company had said in a filing.

In India, Lokesh Machines is the first private firm to manufacture and supply small arms to elite forces like the Indian Army, NSG, Assam Rifles, and BSF.