Temasek Invests $145 Million in Mahindra's Electric Vehicle Drive

Indian automaker Mahindra & Mahindra has partnered with Singapore-based Temasek, a private equity firm, for its electric vehicle (EV) ambitions. Temasek will acquire up to 2.97% stake in Mahindra's EV subsidiary, Mahindra Electric Automobile Limited (MEAL), for ₹1200 crore ($145 million), valuing MEAL at ₹80,580 crore ($9.8 billion). This aligns with Mahindra's plan to raise $1-1.3 billion over 2-3 years by divesting shares in its EV unit. Mahindra aims to capture 20-30% of SUV sales from EVs by 2027. They're investing in an EV factory and platforms for upcoming EV SUVs. The partnership signifies Mahindra's commitment to a sustainable and innovative automotive future.

M&M Approves Merger of 3 Subsidiaries

The Mahindra & Mahindra board has unanimously approved the merger of its wholly owned subsidiaries, namely Mahindra Heavy Engines Limited (MHEL), Mahindra Two Wheelers Limited (MTWL), and Trringo.com Limited (TCL), with the parent company. The merger will involve the transfer of all assets and liabilities of MHEL, MTWL, and TCL to Mahindra & Mahindra Limited at their current carrying values. Notably, the parent company holds the complete share capital of these three subsidiaries, either directly or jointly with nominee shareholders.

Regarding the merger process, Mahindra & Mahindra has outlined that the effective date for the merger scheme is set for April 1, 2023. However, this date is subject to the approval of the National Company Law Tribunal, Mumbai Bench (NCLT), or any other relevant authority.

1. Mahindra Heavy Engines Limited (MHEL): This subsidiary is primarily involved in the manufacturing and sales of engines and various auto components used in vehicles and genset applications.

2. Mahindra Two Wheelers Limited (MTWL): MTWL focuses on the distribution of parts required for two-wheelers, passenger light motor vehicles, and commercial vehicles manufactured and marketed by Mahindra. The subsidiary has built a robust network of dealers across India to ensure the timely availability of spare parts for customers.

3. Trringo.com Limited (TCL): TCL is engaged in the organized farm equipment rental business, operating through a franchisee-based model.

The merger is anticipated to yield several benefits for Mahindra & Mahindra, including streamlined operational and administrative costs. Furthermore, the consolidation of these subsidiaries will simplify the company's structure and enhance management efficiency.

Mahindra & Mahindra board's decision to merge its subsidiaries – MHEL, MTWL, and TCL – with the parent company is a significant strategic move aimed at optimizing operational efficiency and facilitating smoother management. 

Temasek Invests $145 Million in Mahindra's Electric Vehicle Drive

In a significant leap towards realizing its electric vehicle (EV) aspirations, Mahindra & Mahindra has forged a binding agreement with Singapore-based private equity firm Temasek. The accord involves Temasek's acquisition of a stake of up to 2.97% in Mahindra's passenger electric vehicle subsidiary, Mahindra Electric Automobile Limited (MEAL), in exchange for a substantial investment of ₹1200 crore ($145 million). 

This infusion of capital has propelled MEAL's valuation to a remarkable ₹80,580 crore ($9.8 billion), reflecting a 15% surge from its previous valuation of $9.1 billion during its preceding funding round with British International Investment (BII).

This collaboration with Temasek epitomizes Mahindra's proactive strategy to secure both capital and strategic reinforcement for its burgeoning EV enterprise. With the rapid evolution of sustainable transportation, Mahindra recognizes the necessity of fortifying its EV initiatives. The company has been engaged in advanced negotiations with global investors, aiming to raise between $1 billion to $1.3 billion over the upcoming 2-3 years by divesting shares in its EV unit.

Temasek's investment will take the form of Compulsorily Convertible Preference Shares (CCPS), effectively positioning the private equity firm with a notable stake ranging from 1.49% to 2.97% in MEAL. This move aligns Temasek with British International Investments (BII), an existing investor in MEAL. The infusion of funds from these reputable investors augments MEAL's financial prospects while also ushering in invaluable global expertise, a factor that Mahindra believes will play a pivotal role in shaping the future trajectory of its EV subsidiary.

Rajesh Jejurikar, Executive Director and CEO of the Auto & Farm Sectors at Mahindra & Mahindra underscores the significance of this partnership, emphasizing that Temasek's involvement fortifies Mahindra's global strategic alliances. 

Furthermore, Jejurikar unveils Mahindra's audacious objective of capturing 20% to 30% of its SUV sales from electric vehicles by 2027. This reiterates the company's steadfast commitment to transitioning into a sustainable future while minimizing the dilution of its holdings.

Mahindra & Mahindra Q1FY24 Standalone YoY

Robust Revenue Growth:

Mahindra & Mahindra records a substantial 23% increase in standalone revenues, reporting Rs 24,368.33 crore for Q1FY24, as compared to Rs 19,813.01 crore in Q1FY23.

Impressive Profit Surge:

The company's net profit witnesses a remarkable surge of 97.6%, reaching Rs 2,773.73 crore in Q1FY24, up from Rs 1,403.61 crore in the corresponding period of the previous year.

Significant EBITDA Growth:

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) displays notable growth, recording a 46% increase to Rs 3,547.39 crore in Q1FY24, as compared to Rs 2,421.52 crore in Q1FY23.

Margin Enhancement:

Mahindra & Mahindra's margins exhibit improvement, rising to 14.6% in Q1FY24, in contrast to 12.22% reported in Q1FY23.

This strong financial performance underscores Mahindra & Mahindra's resilience and strategic management in a dynamic market landscape. The company's focus on revenue diversification and effective cost management is clearly reflected in these impressive results for the first quarter of the fiscal year 2023-24.