M&M Plans to List Profitable Units and Sell Loss-Making Units

Mahindra & Mahindra Ltd (M&M), the Indian multinational vehicle manufacturing corporation has announced that the organization is planning to list 10 of its most profitable units public in the next 5-7 years and sell loss-making units in order to boost shareholders’ return on equity. The main idea behind the listing of profitable units is to unlock the value for existing shareholders by bringing in new investors. M&M has identified the 10 companies, across sectors such as mobility, clean energy, rural, financial services, infrastructure and technology, to drive the future growth of the group, Anish Shah, Group Chief Financial Officer and Deputy Managing Director at M&M, stated in an interview. It is also worth mentioning that Anish Shah will succeed the current Managing Director and Chief Executive Officer Pawan Goenka in April.

The 10 units identified by M&M include cleantech firm Mahindra Susten, diesel generator maker Mahindra Powerol, electrical steel processor Mahindra Accelo and supply-chain consultant Bristlecone. Classic Legends Pvt. Ltd, the maker of Jawa Motorcycles; Mahindra Electric Mobility, the maker of the electric vehicles; and used-car seller First Choice Wheels are also in the list of 10 companies that will launch their IPOs over the next

M&M has identified the 10 companies, across sectors such as mobility, clean energy, rural, financial services, infrastructure and technology, to drive the future growth of the group

few years.

“We would expect 2-3 businesses to IPO in the next 2-3 years; some will go public in 3-5 years and others in 5-7 years,” said Anish Shah. “These 10 gems (units) were identified as part of M&M’s strategic plan to ensure 18 percent return on equity (RoE) across all business units in the mid-term,” he said. To achieve the target, the company is to sell loss-making units including SsangYong Motor Co., the US-based electric bike startup GenZe and Australia-based small aircraft maker GippsAero Pty Ltd.

“While their (10 gems) contribution to M&M’s overall revenues is low, currently, their cumulative revenues are more than Rs. 10,000 crore, which is not a small amount. So, these are all entities that have a reasonable size as of today. This is in addition to the fact that they are doing well in their respective industries,” said Anish Shah. He also said that the company is scouting for investors in its used-car business to capitalize on the demand momentum for pre-owned cars. Anish Shah also expressed that besides reducing cash burn and ensuring proper capital allocation across group companies, putting the 10 identified business units on a growth path is a top priority for the organization.