Utility vehicle major Mahindra & Mahindra Ltd (M&M) will acquire 100 per cent stake in Italian engineering and design services firm Engines Engineering SpA and set up a new business, subject to receipt of necessary approvals, the company said in a release.

M&M said it plans to integrate the two-wheeler design firm, with revenues of around $12 billion, with Mahindra Systech, which is aiming to build globally competitive businesses in selected verticals. M&M did not disclose the cost of the acquisition.

''Continuing its vision to create 'an-art-to-part' entity, M&M through Systech has been looking at acquisition of a reputed design house. Systech's engineering services business has grown by a factor of ten in the last four years and continues to grow at the same pace as it provides its unique domain knowledge in the field of Automotive and Aerospace design,'' Hemant Luthra, president, Systech, said in the release.

''Demand for offshoring of engineering services has been growing rapidly. Acquiring a design house like Engines Engineering provides us the perfect vehicle to penetrate into markets of Europe, China & Russia. It also gives us the impetus to scale up the business, have access to market and technology along with management skills, '' he added.

Mahindra Engineering Services has over 1,000 engineers in India. The division provides high-end cost-effective solutions and can support the offshore needs and technical skills of Engines Engineering, he said.

''Engines Engineering has been operative for the last three decades and I am keen to partner M&M to fuel growth. I have a great comfort level with M&M, having worked together for the last two years. Our relationship has now been strengthened and we can combine our technological strengths, customer base and lower cost engineering excellence to fuel growth in Europe and India, ' said Alberto Strazzari, chairman of Engines Engineering SpA.

The management team of  Engines Engineering will continue with Alberto Strazzari continuing as its chairman.

''I am delighted to welcome Alberto Strazzari and his management team into the Mahindra family and look forward to harnessing their expertise in increasing the depth of our engineering and design services offering,''  said Anand Mahindra, vice chairman and managing director of Mahindra Group.

''This will accelerate the growth of Mahindra Engineering Services in what we believe is the next great opportunity for India and enable it to leverage its engineering talent for the benefit of customers across the world,'' he added.

Based in Castenaso near Bologna, Engines Engineering is in the business of two-wheeler design and developing of motorcycle prototype and had revenues of approximately $12 million in 2007.

Alberto Strazzari holds 85 per cent and three other investors hold the balance in Engines Engineering.

Engines Engineering  has been associated with some of the well known names like Benelli, Beta, Ducati, Gilera, Honda, LEM, Malaguti and Yahama.

Apart from these, they have developed many products that bear a range of other brands, from Spanish manufacturers to ones in the Far East.

The $6.7 billion Mahindra Group is among the top 10 industrial houses in India. Mahindra & Mahindra is the only Indian company among the top tractor brands in the world.