Mahindra Group Shuts its Australian Plane Manufacturing Unit

Auto major, Mahindra Group has shut down its aircraft manufacturing business in Australia and for more than a decade now, the company has been searching for a buyer after it had entered the high-cost plane-making business.

The company’s decision to close the plant comes a little over a year after one of the planes that were manufactured at the Australian facility and were crashed in Sweden killing nine people. Last year, the company had acquired a 75.1 percent stake each in two Australian aerospace firms, Gippsland Aeronautics (Gipps Aero) and Aero staff Australia. The deal was closed for Rs. 175 crore as part of its plans to produce aircraft and allied components to provide service to the global market.

However, Gippsland Aeronautics has been involved in aircraft manufacturing, while Aero staff is into producing aircraft components.
Commenting on the Australian division shut down, Anish Shah, Deputy Managing Director, and Group CFO, Mahindra & Mahindra says, "We have shut down our Gipps Aero business, which was into the manufacturing of 8- and 10-seater planes in Australia. It is up for sale for someone who wants to buy it. But, if there is no buyer, the business has been shut down already.” He further adds “The Company is positive as the aircraft business is behind us because that had taken a significant amount of cash and the industry even earlier was not in a good shape."

Anish has also stated that the Mahindra Group, would however continue with the aerospace business which has long-term growth potential. He continued that he is not expecting it to be one of Mahindra's short-term growth trips. Anish believes that will this kind of business would not yield rapid growth in the next one to three years. However, this could be a solid business for the long term and is expecting contribution on a larger scale like three to five years or even five to seven years.

The brand's flagship firm Mahindra & Mahindra has witnessed a 88 percent drop in its profit after tax (PAT) making it Rs.162 crore for the second quarter of September 30, mainly on account of the impairment provision of Rs 1,149.46 crore for certain long-term investments.

Mahindra Vehicle Manufacturers Ltd (MVML) has reported a PAT of Rs 1,355 crore during the July-September period of the previous fiscal. However, the company's revenue has increased to Rs 11,590 crore in the September 2020 quarter, against Rs 10,935 crore in comparison with last year.