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M&M charts plan for group firms’ share sale
M&M has identified 10 of its promising units 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, said in an interview.
Mahindra and Mahindra Ltd (M&M) is crafting plans to take 10 of its most promising units public in the next 5-7 years as the automobiles-to-software conglomerate aims to unlock value in these so-called “gems” 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, said in an interview.
Shah will succeed the current managing director and chief executive officer Pawan Goenka in April.
The 10 units identified by Mahindra and Mahindra 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 Reva electric car; and used-car seller First Choice Wheels are also among the 10 companies that will sell shares to the public for the first time.
“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,” Shah said.
These 10 gems were identified as part of M&M’s strategic plan to ensure 18% 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 ₹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,” Shah said. “They are positioned well; they have shown a strong ability to execute and deliver profits, and many of them are profitable and are generating cash. Many of them will not require more cash from the parent to grow.”
Shah said that the company is scouting for investors in its used-car business to capitalize on the demand momentum for pre-owned cars.
“In the aftermarket business, which is used cars, we have to look at potentially getting an investor for that business and look at adding a much greater front end to it,” Shah said, adding that a stronger consumer connect would allow the used car business to grow faster.
Similarly, M&M sees promise in steel processor Mahindra Accelo as the central government is likely to introduce the much-awaited vehicle scrappage policy soon.
Shah is also upbeat about M&M’s supply chain business.
