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Informist, Wednesday, Jul. 29, 2026

 

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--M&M to sell truck, bus division for INR 5.25 bln on slump sale basis
--M&M: Will create one common leadership for M&M bus arm, SML Mahindra
--CONTEXT: Comments by mgmts of M&M, SML Mahindra in a virtual conference
--M&M: M&M bus arm will be a drag on SML Mahindra's fincl initially
--M&M: Will launch electric CVs going forward, cognizant of the trend
--M&M: Sale of M&M bus arm will be EPS accretive for SML Mahindra
--M&M: Working on capex needs of combined SML Mahindra, M&M bus arm
--M&M: See huge pipeline of synergies in combined SML Mahindra, co's bus arm
--M&M: See operating leverage, synergies, pricing power benefits post deal
--M&M: Have enough headroom to boost capacity within SML Mahindra's unit

 

MUMBAI – Mahindra & Mahindra Ltd. Wednesday said its board has approved the sale of its truck and bus division to its listed subsidiary SML Mahindra Ltd. on a slump-sale basis for INR 5.25 billion. The transaction paves the way for the automotive major to create a unified truck and bus business under SML Mahindra, which it had acquired a year ago from Sumitomo Corp. and Isuzu Motors Ltd. for a 58.97% stake.

 

"Through the scale benefit of both the organisations (M&M's truck and bus division, and SML Mahindra), this becomes the fourth largest formidable challenger in the commercial vehicle industry with a lot of commercial and cost synergies," Amarjyoti Barua, the chief financial officer of the Mahindra group, said in a virtual briefing.

 

M&M is banking on the brands created by these two businesses as it seeks to move up the market share ladder. M&M ranks third in sales of intermediate and light commercial vehicles with a capacity under 12 tonnes and wants to be the leader by 2030-31 (Apr-Mar), the company said. M&M has a limited presence in these commercial vehicles, with payload capacities between 5 and 18.5 tonnes, and aims to be a "relevant" player by FY31. The auto major has a marginal presence in heavy commercial vehicles that have a payload capacity of 28-55 tonnes, which it wants to improve to an "enhanced" presence, it said.

 

M&M's truck and bus division had achieved cash break-even and posted earnings before interest, tax, depreciation, and amortisation-positive results in FY25. Barua expects this deal to be accretive at the earnings per share level for SML Mahindra. He expects M&M's truck and bus division to be a drag on the financials of SML Mahindra initially. "A lot of the synergies will come from some of the activities that have been underway in MTBD (M&M's truck and bus division). So, that will pull the combined financials up significantly," Barua said. 

 

The company is also considering to develop electricity-powered commercial vehicles going forward, details of which it did not elaborate. "The joint product plan of both the companies, put together...would cover certain electric vehicles beyond a bus, which right now SML Mahindra is creating," SML Mahindra's Executive Chairman Vinod Sahay said. M&M is tracking the pick-up in traction in electric commercial vehicles and plans to create similar products of its own between the two brands.  

The company currently provides aggregates to the electric vehicle ecosystem in India. "Without launching a project, there are products in the industry we already know quite a bit...because many of the products currently playing in the market are derived out of Mahindra's truck and bus platform," Sahay said.

 

M&M is currently studying capital expenditure requirements of the combined entity, but did not detail the plans. "The team right now is working on the need of capex that the joint entity will need, which will be around capacity expansion, newer technologies like ADAS (advanced driver assistance systems) and EVs. And also around the wider and more comprehensive product segment," Barua said.

 

The company expects this transaction to be completed in FY27. Barua said M&M's plants in Maharashtra's Chakan and Telangana's Zaheerabad will continue contract manufacturing operations for M&M's truck and bus range. Going forward, the company wants to leverage its existing manufacturing footprint based on efficiencies and other factors.  

 

Since acquiring SML Isuzu, which has since been rebranded to SML Mahindra, M&M has been able to "harmonise" leadership only at the top levels at the two firms because of structural reasons. "We could do (harmonisation of leadership) only at the top level because the two businesses were lying in two different companies and, hence, there was a limit to what level of leadership harmonisation we could do," Barua said. "Going forward, we intend to create one common team for the entire organisation dealing with two brands," he said.  

 

 

In their quest to build leadership in the truck and bus segments, the company has identified a "huge" pipeline of synergies. This includes a broad portfolio of products which is backed by scale, product development, operational consolidation which can drive productivity, and an integrated structure which pushes collaboration.

 

"Both these platforms (M&M truck and bus division, and SML Mahindra) have been sub-scaled for all this while. Now, here is an opportunity for the combined might of these brands to create significant growth potential," Barua said, adding that this growth can drive operating leverage. Additionally, pricing power will also give the combined entity a boost. 

 

Both brands put together currently have around 200 dealers. Including touch points and service setups, this goes up to around 650. The company has identified certain locations in India where it would want a higher representation of both these brands. The company believes adding 20-25 dealerships over the next 1.0-1.5 years will complete its main dealership network. Additionally, it will look to add around 50-60 service points in the same period. 

 

For the March quarter, M&M had reported a net profit of INR 37.37 billion on revenue of INR 395.54 billion. For the June quarter, SML Mahindra had reported a net profit of INR 636.20 million on revenue of INR 9.58 billion. Wednesday, shares of M&M closed 1.5% lower at INR 3,221.80 and those of SML Mahindra closed 20% higher at INR 4,566 on the National Stock Exchange.    End

 

Reported by Anand JC and Pratyush Kumar

Edited by Akul Nishant Akhoury

 

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