M&M is wheeling big money into business. What is the plan?

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India’s fourth-largest auto company, M&M, is shifting into a higher gear and pressing down on accelerator. It plans to fuel its business growth with an ambitious capital infusion plan. It will inject Rs 37,000 crore into its business, across different segments, over the next three years. A bigger part of this money will go into the auto business.

“We will invest Rs 37,000 crore from FY25 to FY27 and a significant part of it — Rs 27,000 crore, will be deployed for the auto business,” said Anish Shah, the Managing Director and CEO. Of the total amount, while Rs 14,000 crore will be invested for the internal combustion engine (ICE) driven models, Rs 12,000 crore will be pumped in for electric vehicles. The farm business — the company’s cash-cow — will see an investment of Rs 5,000 crore. The services business of the group which includes Tech Mahindra, Mahindra Holidays & Resorts, Mahindra Financial Services, among others, will get an investment of Rs 5,000 crore. Mahindra will raise the aforesaid amount through internal accruals — each segment would fund itself.

“We believe this is on the back of visibility of enhanced SUV volume going ahead and improving profitability in the auto segment, resulting in increased cash flow which will allow M&M to fund this through internal accruals,” ICICI Securities has said.

The company had outlined a new strategy for the coming five years with a focus on capitalizing on its market leadership in segments like SUVs, tractors and pickup trucks while scaling its growth-phase businesses five-fold during this period.

Shah has revealed that the company aims to introduce 23 new vehicles by 2030. This ambitious plan includes the launch of nine internal combustion engine (ICE) SUVs, seven battery electric vehicles (BEVs), and seven light commercial vehicles.

ICE will remain hot
While emphasizing the importance of internal combustion engine (ICE) models in the current market scenario, Shah stated that they remain a crucial part of the company’s product lineup. He highlighted that ICE vehicles are expected to remain important for consumers for the next five to seven years.The company has allocated Rs 27,000 crore for the auto division between FY25 and FY27, with Rs 14,000 crore dedicated to the ICE vertical for new model introductions and refreshed versions of existing models. The goal is to enhance the SUV portfolio and ensure a strong market presence.The SUVs have become the biggest growth component in the auto sector. The SUV thirst is likely to push passenger vehicle (PV) sales in India to record high this year, Crisil has said. The SUVs are likely to propel overall PV volumes to record high at 5-7 per cent in FY25, growing from a high base of 6-8 per cent estimated for FY24, Crisil has said. M&M’s significant investment in the SUV segment is poised to take advantage of this emerging trend.

The company plans to launch nearly 23 all new models including nine ICE SUVs, seven battery electric vehicles and seven light commercial vehicles by 2030. “Out of the nine SUVs, six will be all-new products and three will be mid-cycle enhancements. So (we have a) very aggressive plan towards ICEVs over and above our Born Electric portfolio,” said Rajesh Jejurikar, ED – auto and farm business at M&M. “The 7 LCV have electric versions as in. So a lot is happening to make us future-ready.”

M&M’s EV play
M&M was a bit of a latecomer in the EV sector but its now well-poised to race ahead. “For us, it is important to have outstanding vehicles when we launch and which is why we took the time to make sure that we have a born electric platform and that we have got designs that consumers are going to look at and say, wow, I love that design. We have got the technology, the features in the car. So, all of that is important. And if that takes a little longer, that is fine but more critical is the quality of the vehicle,” Shah has told ET Now.

M&M has announced it will invest Rs 12,000 crore in the EV business MEAL (Mahindra Electric Automobile Limited) over the next three years The company is at an advanced stage of starting production of its Born Electric portfolio, which includes six battery-powered sport utility vehicles. M&M intends to launch the electric SUVs between January and March, and expects battery-powered models to account for 20%-30% of its SUV lineup by 2027, said Jejurikar. Mahindra is currently in “active” talks with a company regarding the production of electric vehicle batteries within India, he said.

M&M CEO Automotive Sector Nalinikanth Gollagunta has told PTI that starting January 2025, the company will be rolling out five new battery electric vehicles in the coming years. “These electric SUVs will be built on Mahindra’s innovative INGLO platform and aim to cater to a variety of consumers through their diverse range. The launch of these SUVs is part of Mahindra’s broader strategy to lead in the electric vehicle sector, and we expect 20-30 per cent of our portfolio to be electric by 2027,” he noted.

M&M had attracted investments from British International Investment (BII) in its subsidiary Mahindra Electric Automobile (MEAL) and from World Bank arm International Finance Corporation (IFC) in Mahindra Last Mile Mobility. IFC had marked this investment as a significant step towards scaling up domestic production of electric vehicles and driving adoption across India while also helping the government deliver on its climate targets.

As part of M&M’s plan to infuse big money into MEAL, Temasek invested Rs 1,200 crore in MEAL last year at a valuation of $9.8 billion, making it the most valuable EV company in India.

Growth gems
Group Chairman Aanand Mahindra had said last year that the group has identified the four main business areas and nine other businesses with high growth potential based on the objective of scale. “Each growth gem has taken up the 5X challenge – our businesses have to grow 5X in the next five to seven years from where they are today in terms of market cap. I am confident that the next few years will see an astounding pace of growth,” said Mahindra. Under the three broad business verticals carved recently, the group has identified Mahindra Last Mile Mobility and Classic Legends as the growth gems within the auto business; farm machinery as the growth gem within the farm equipment business; and logistics, real estate, vacation ownership businesses, among others, as the gems within the services vertical.

Shah told ET Now today that the group’s growth gems are well-positioned. “We are very excited because we see all of our growth gems being very well positioned and that is in addition to our large businesses which will drive significant growth. Our large businesses are also doing very well. So, they are also looking at multiples of growth despite their size and with auto firing on all cylinders, with tractors doing very well, Tech Mahindra starting its turnaround, Mahindra Finance on a very strong turnaround path, I think we are very well positioned today,” Shah said.

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