The Mahindra and Mahindra group is all set to make a big value unlock and restructure its group companies business into three verticals, Zee Business Executive Editor Swati Khandelwal said in an exclusive report on Tuesday. 

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According to Khandelwal, “The roadmap for value unlocking and restructuring is almost ready and the M&M board is likely to demerge three of its businesses of the group into one.” 

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A new company will be formed by separating the agriculture and farm from the overall business, the executive editor said, adding further that Electrical Vehicle Mobility Solutions may also be separated as a different entity seeing the scope and growth in this EV automobile segment. 

Similarly, other businesses like insurance and used-car, and new brands such as First Cry and Porter are likely to be phased out in a different entity. 

 

This value unlocking and restructuring may take around 2-4 years of time frame, but the roadmap or preparations of this has begun, Khandelwal added. She further said that M&M expects each business to grow at 18 per cent RoE (return on equity). Similarly, it will also focus on the profitability of the business. 

The value unlocking and restructuring will be for all other businesses, except for the automobile business, the executive editor mentioned, adding that the company won’t be diluting their focus from the core business (automobile) of the group. 

However, the group is mulling the electric vehicle segment to be a new entity, mainly by spinning it off, or bringing partners of the board and by doing many other changes in the EV category, she further said. 

The group also mulling to strengthen the farm and agri business as M&M is one of the world’s largest tractor manufacturers and in this regard, the company has also done dozens of acquisitions in Europe on the same theme, the executive editor also states. 

Zee Business Managing Editor Anil Singhvi says it's big development with respect to the M&M group, if this demerger of business and listing of these entities takes place, it would be termed as the biggest corporate story of this year. 

He added the investors get clarity on different businesses of the group and the value unlocks of the company also happen due to restructuring, especially in the automobile and farm equipment business. 

Citing an example, the managing editor mentions that M&M would get the same benefit after the demerger of its businesses, the way Tata Group and L&T have received in the recent past.