11 Mar , 2024 By : Debdeep Gupta
No immediate plan for auto business demerger, says Mahindra CEO Shah, While M&M prioritizes maximizing shareholder value through synergies, Shah says the group can consider a demerger if it promises greater value but such deliberations are not on the immediate agenda
Mahindra & Mahindra Ltd (M&M) Group CEO and managing director Anish Shah has said the company has no plans for a demerger similar to the one announced by Tata Motors in the previous week.
While Tata Motors plans to demerge its commercial and passenger vehicles businesses, Shah told Moneycontrol that M&M was committed to leveraging synergies between its auto and farm equipment businesses.
"That's not something we're looking at right now. See, for us, it is essential to create value in all our businesses. We see a much greater value from synergies across our businesses," Shah said in an interview.
M&M was exploring opportunities to enhance synergies between its farm and auto businesses. "So, the approach we have is if we can create far greater value for shareholders by leveraging synergies across businesses than by having the businesses separate," he said.
To drive home the point, Shah said the impressive margins achieved by M&M's farm business were due to the company's dominant market position. Despite not leading the passenger vehicle industry, M&M's auto business boasted the best margins, largely due to synergies with other sectors.
While at present M&M wants to prioritize maximizing shareholder value through synergies, Shah hinted at considering a demerger in the future if it promises greater value. He, however, clarified that such deliberations were not on the immediate agenda.
In its December quarter earnings release, M&M reported a record auto sales volume of 211,000 units, marking a 20 percent increase, along with its highest-ever utility vehicle volumes at 119,000. M&M achieved a tractor market share of 41.8 percent on the farm equipment side, up 80 basis points, representing its highest Q3 market share since FY19.
One basis point is one-hundredth of a percentage point.
At 11.13 am, the M&M stock was trading at Rs 1,881.60 on the National Stock Exchange, down 0.84 percent from the previous close.
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