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Informist, Monday, Apr. 28, 2025

 

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--M&M: Will get active in some overseas markets post SML Isuzu acquisition 
--M&M: Co's existing ecosystem can help SML Isuzu launch EV buses faster 
--M&M: SML Isuzu is in advanced stages to launch staff, school EV buses 
--M&M: Want to focus on building dealer networks post SML Isuzu acquisition 
--M&M: Have a very positive outlook for trucks and buses segment 
--M&M: SML Isuzu will remain a listed entity 
--M&M: Employees of both cos needn't worry, we have a growth perspective 
--M&M: Investments will be needed in SML Isuzu to ramp up capacity 
--M&M: SML Isuzu has a very strong product portfolio, good quality offerings 
--M&M: Have strong, realistic growth ambitions in medium-heavy CV segment 
--M&M: Will significantly gain network capability post SML Isuzu acquisition 
--M&M: Had lost market share in trucks and buses due to COVID-19 
--CONTEXT: M&M mgmt at press and analyst meet post SML Isuzu acquisition 
--M&M: SML Isuzu acquisition is a very strong strategic fit for co
 

 

NEW DELHI – Mahindra & Mahindra Ltd. Monday said post acquisition, SML Isuzu Ltd. will remain a separate listed entity even though operations will be integrated. In a press and analyst meet in Mumbai, Mahindra & Mahindra said the acquisition will help it gain solid footing in the medium-heavy commercial vehicle segment, especially with SML Isuzu's presence in the electric and compressed natural gas-run bus segment. 

 

"The one area of which we will significantly gain is network, because today both players are small, there's an opportunity to synergise on the network, and that we believe will give the scale that the businesses need each individually," the management said. In addition, M&M will gain access to fleets, especially buses, with the SML Isuzu acquisition.

 

SML Isuzu is primarily in the business of manufacturing and selling light commercial vehicles, medium commercial vehicles, and has a portfolio of buses and trucks. M&M said on Saturday it will acquire a 59% stake in SML Isuzu from Sumitomo Corp. and Isuzu Motors Ltd. at INR 650 per share, for roughly INR 5.6 billion overall. 

 

M&M had a market share of around 5% in the trucks and buses segment as of 2018-19 (Apr-Mar), but lost it after the COVID-19 pandemic due to transition to Bharat Stage-VI norms primarily, and some other issues. It now aspires to have a market share of 10-12% over the next five years, most of it in the light commercial vehicles and intermediate light commercial vehicle segment.

 

M&M's majority stake in the bus-maker is to primarily establish a strong presence in the over-3.5-tonne commercial vehicle segment. While M&M currently has a market share of 3% in the space, it will go up to 6% post acquisition. By FY36, M&M has set a target to corner a market share exceeding 20% in the space. M&M said it currently has a very positive outlook for the trucks and buses industry, given growth in the economy along with replacement demand. 

 

Calling the acquisition a strong strategic fit at an appealing and fair price, M&M said its growth ambitions are rooted in reality. "... They (ambitions) are based on our understanding of where our core strengths are and where we can gain. We are mindful that the MHCV segment is a very competitive segment, and we've been very realistic about the growth aspirations we have in that segment," M&M told reporters and analysts. Given that both companies have a growth mindset, employees may not feel uncertain about their futures, M&M said.

 

"We believe SML Isuzu has a very strong product portfolio. They've already made significant investments over the last four years in their product." M&M does not anticipate any significant investment in SML Isuzu in the next two years at least, as the latter's factory can sufficiently deal with the current demand. Export is one area where it sees new business active in some markets. 

 

"It (SML Isuzu) does need some investments, but nothing dramatic. Most of the investments, if at all, will be needed as we ramp up capacity," the Thar-maker said. Most investments will be funded out of internal cash accruals of SML Isuzu.   

SML Isuzu is currently in advanced stages of developing electric buses, an area that M&M currently does not have a presence in. "We believe that with the expertise that we have on electric through multiple segments now, we can strengthen that proposition and probably improve costs over what they have," M&M said.

 

Given M&M's existing electric powertrain capabilities, the speed of SML Isuzu's electric bus launch could be hastened, the company said. SML Isuzu will launch electric buses aimed at the staff and school, executive coach segments. M&M is not looking at inter-city and state transport buses currently.

 

M&M and SML Isuzu together have over a 100 dealers, and over 200 touch points each, including service centres. M&M wants to focus on building dealer networks, using complementary network aimed at bolstering after sales service.

 

M&M had reported a net profit of INR 29.64 billion for the December quarter on revenues of INR 305.38 billion. At 1215 IST, shares of the company traded at INR 2,899, up 1.2%. SML Isuzu shares were at INR 1,596.10, down 10%.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Anand JC

Edited by Vandana Hingorani

 

 

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