Undeterred by the financial setback caused by the lockdown imposed in the wake of Covid-19 and other factors, the Mahindra Group had made robust plans to recoup and regain its leadership position. In a recent media interview with CNBC-TV18, M&M’s Deputy MD and Chief Financial Officer, Dr Anish Shah discussed the Group’s future growth strategy.
“First, we would like to get back to business as usual. Second, getting back to Rs. 5,000 crore of cash flow and third, we were the best performing stock on the Nifty for 17 years and we want to get back to that run,” he said.
The company’s farm equipment business reported very strong results during 1Q, FY-21 and the company is in fact struggling to meet demand, despite almost 95% capacity utilisation at the plants. “We look to make a recovery in the farm and auto business in under a year. The third, regaining the 17-year-run as the best performing stock, will take a little more work,” he said.
Stating that the company had commenced an intensive review of all its international businesses, Mr Shah said, “We intend to address all the loss making international subsidiaries by the end of this year.” SsangYong and GenZe had contributed 80% to the Group’s impairments in the January to March quarter. The Group intends to reduce the remaining 20% of impairment on account of international businesses to 2%.
Dr Shah emphasized that the Group will focus on businesses with tangible financial results or strategic benefits. “There will be hard calls on businesses and we may need to exit businesses to get scale and returns,” he said.
Detailing Mahindra’s growth strategy, Dr Shah said, the Group has identified several of its unlisted businesses – including Mahindra Susten, Rural Housing Finance, Powerol, Accelo, Agri, Aftermarket, Classic Legends, Electric, Mobility, and Bristlecone – as growth drivers. Businesses, which have the right to win and the ability to scale, will get more investments.
Underscoring that the list will continue to evolve, Dr Shah said, as subsidiaries show potential for growth and profitability they will be added to this list. As regards the used car business, the Mahindra leader did not rule out a listing of the business describing it as a business with huge potential.
Shah said that Mahindra was hoping to make a complete recovery in the auto segment in the next 3-6 months, subject to a steady supply chain. M&M is looking to strengthen the core of the auto business by leveraging the joint venture with Ford.
“We are ready for the challenge in the SUV segment, we have a 45% market share in the pick-up segment. We have three launches coming up in the large SUV segment over the next 12-15 months,” he said. The company, like other vehicle manufacturers, is also facing supply disruptions due to localized lockdowns.
Commenting on the EV business, Dr Shah said, M&M will remain invested in it but was actively speaking to investors in order to find the right strategic partner. “Electric is here to stay but the timing of the investment has to be right. We are open to a stake sale from the point of view of getting a partner in Mahindra Electric,” he said.
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