In a major restructuring move, auto-to-tech conglomerate Mahindra & Mahindra is likely to separate its automotive business into 3 parts, the Economic Times reported Friday.
The move will include separating the company’s electric vehicle (EV), tractor and passenger vehicle businesses into 3 separate entities, the report mentioned. The EV business, along with its manufacturing unit in Pune will be clubbed with Italian subsidiary Pininfarina to form a company.
The farm equipment and passenger vehicle businesses are likely to become standalone entities. After M&M acquired Punjab Tractors in 2007, the farm equipment and tractor business of the company is the biggest one in the conglomerate’s automotive business and boasts a 43% market share in the country’s tractor market.
According to the report, the main rationale behind the demerger is to unlock value in each of the automotive-related businesses.
M&M’s shares traded with a mild cut of 0.3% Friday.
Last year, M&M had plans to list Pininfarina – the Italian arm it acquired in 2015 – in the US via a special purpose vehicle (SPV) but is now instead likely to club the company with its EV project.
M&M recorded sales of 45,640 units for the month of April 2022, registering a growth of 25% year-on-year, with passenger vehicles growing 23% and 3-wheeler sales rising 47%. Exports rose 35% year-on-year. Meanwhile, tractor sales saw a robust growth of nearly 50% year-on-year at nearly 41,000 units during April.
The company reported highest-ever quarterly sales of its EV 3-wheelers, Treo Auto and Treo Zor for the quarter-ended December, according to a regulatory filing. Despite commodity inflation and prevailing semiconductor shortage, the auto maker added that it saw a very healthy booking pipeline for its automobile business with the Mahindra XUV 700 registering nearly 1 lakh bookings in 4 months.
The country’s second-largest utility vehicle manufacturer sold 22,168 utility vehicles last month versus 18,186 units, up 22% year-on-year.
M&M reported a net profit of Rs 3,640 crore for the 9 months-ended FY22 on a low base, registering a rise of nearly 4 times year-on-year. Operating profit (EBITDA) for 9 months of FY22 was marginally higher (up 2%) year-on-year, at Rs 5,097 crore vs Rs 5,016 crore year-on-year, while revenue rose 29% to Rs 40,307 crore vs Rs 31,236 crore year-on-year.