Mahindra considers sell-out of loss-making units; lists 10 of its ‘gems’

'We would expect 2-3 businesses to IPO in the next 2-3 years; some will go public in 3-5 years and others in 5-7 years,' Anish Shah, group chief financial officer of M&M, said

Anand Mahindra, mentor, non-executive chairman, Mahindra Group, Executive Chairman, Pawan Goenka, Managing Director, Chief Executive
While the 10 gems' contribution to M&M’s overall revenues is low, currently, their cumulative revenues are more than ₹10,000 crore.

Mahindra and Mahindra Ltd (M&M) is planning to sell its loss-making units including SsangYong Motor Co., and also will take 10 of its ‘gems’ public in the next five to seven years, Anish Shah, group chief financial officer and deputy managing director at M&M, has said.

According to livemint.com, cleantech firm Mahindra Susten, diesel generator maker Mahindra Powerol, electrical steel processor Mahindra Accelo and supply-chain consultant Bristlecone, Classic Legends Pvt. Ltd, the maker of Jawa Motorcycles; Mahindra Electric Mobility, the maker of the electric vehicles; and used-car seller First Choice Wheels are among the 10 companies that will sell shares to the public for the first time.

“We would expect 2-3 businesses to IPO in the next 2-3 years; some will go public in 3-5 years and others in 5-7 years,” Shah said in an interview, according to livemint.

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Shah said, these 10 “gems” were identified as part of M&M’s strategic plan to ensure 18% return on equity (RoE) across all business units in the mid-term, and to achieve the target, the company is to sell loss-making units including SsangYong Motor Co., the US-based electric bike startup GenZe and Australia-based small aircraft maker GippsAero Pty Ltd.

“While their (10 gems) contribution to M&M’s overall revenues is low, currently, their cumulative revenues are more than ₹10,000 crore, which is not a small amount. So, these are all entities that have a reasonable size as of today. This is in addition to the fact that they are doing well in their respective industries,” Shah said.

“They are positioned well; they have shown a strong ability to execute and deliver profits, and many of them are profitable and are generating cash. Many of them will not require more cash from the parent to grow,” he added.

M&M is looking for investors in used cars business. “In the aftermarket business, which is used cars, we have to look at potentially getting an investor for that business and look at adding a much greater front end to it,” Shah said.

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