M&M looks to hop off SsangYong, fix holes in investments. But its ‘God mode’ is hidden in tractors.
M&M’s bets on distress acquisitions often didn’t pay off. Foreign subsidiaries’ losses have surged from INR1,102 crore in FY18 to INR5,257 crore in FY20. On the other hand, the farm-equipment business, which has only 10% of its capital employed, makes up for 60% of its valuation. Rural strength, combined with better capital allocation, can make things work in M&M’s favour.
Mahindra Group chairman Anand Mahindra (second from left) and Ssangyong Motor CEO Lee Yoo-Il (second from right) pose with its new vehicle "Tivoli" during an unveiling ceremony.
At an annual investor meet of Mahindra and Mahindra (M&M) five years ago, some analysts were trying to corner Anand Mahindra. The argument was an old one — on the need for better capital allocation. The discussion carried on even after the event came to an end. One of the analysts had a cogent view: if M&M just focuses on
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M&M has a long history of making investments, but it needs to re-imagine its strategy now. The company will soon generate a lot of free cash flows after the cleanup. Will it take the safer and easier way out to distribute it to shareholders? Industry watchers are waiting for the answers. ( Graphics by Mohammad Arshad)