Anand Mahindra (File photo)
CHENNAI/NEW DELHI: Mahindra & Mahindra (M&M) is putting all its subsidiaries — including non-core businesses in India and also North American automotive operations — under the scanner to see if they meet the threefold criteria of 18% RoE (return on equity), clear profitability and strategic importance.
These include the Anand Mahindra-led company’s overseas subsidiaries like Peugeot two-wheelers, Sampo (the Finnish farm implements company) and Mahindra Automotive North America (MANA) as well as Indian subsidiaries like Mahindra Sanyo Special Steel. M&M deputy MD Anish Shah said, “We are looking at all of these businesses closely to see if they meet the criteria. By March 31, 2021 we will have a clearer view of the situation.”
After announcing its decision to divest stake in South Korea’s SsangYong Motor and scrap the Genze project in the US, the company has now announced that it will sharply cut back investments in its American subsidiary MANA. “We are in the process of a detailed evaluation and MANA too will be part of our overall evaluation,” Shah said. He added that in view of the “current environment and the focus on capital allocation”, fresh investments into MANA would not have met the company’s targeted return on investment.
With the tough outlook on MANA, the company’s overall North America business is coming under review. M&M is hoping to have more clarity on its future once the litigation with carmaker Fiat Chrysler Automobiles (FCA) ends in that region.
Shah said many subsidiaries are showing strong growth and so won’t be exited. “Many are showing signs of a turnaround but those that are not (showing that signs) and are not strategic to the group will be exited from.”
On the electric vehicles front, the company said it is planning to invite strategic partners and raise funds for both the India green business as well as that run under Pininfarina, as it expects growth here.
The slowdown due to coronavirus would not have any impact on EV plans, M&M MD Pawan Goenka said, adding that significant capital has been invested, which makes the company confident of bagging partners, both financial as well as strategic. “We are open to partnerships and are working on it. We are currently engaged with multiple interested parties to invest in Mahindra Electric and the process is going on.”