Govt capex, rising rural demand to push sales: M&M CEO Anish Shah
With the Indian government increasing its spending on infrastructure building to a record high and rural demand picking up due to a good monsoon so far, sales of Mahindra and Mahindra (M&M) are expected to pick up pace in the coming months, Anish Shah, M&M Group’s CEO and MD, said.
“We are seeing early signs of recovery in the rural markets. We are seeing government spending and margins are getting better. Our estimate for the full financial year for tractor sales is a 5 per cent increase for the entire financial year (FY 2025) versus last year. With the monsoon reasonably good overall, we are on track to get the 5 per cent growth,” Shah said in an interview.
When asked about the government’s nudge to private companies to invest in new capacities, Shah said the group has already raised its automobile division capacity by 3x in the last four years and will add additional capacity this year as well. Between 2025 and FY 2027, the group will deploy Rs 27,000 crore in its auto business with Rs 14,000 crore capex in ICE (internal combustion engine) vehicles and Rs 12,000 crore in the electric vehicle business. It will also invest Rs 5,000 crore each in the farm and service businesses, thus taking the total to Rs 37,000 crore. M&M and its auto division expect to generate sufficient cash to meet their capital investment plans.
Shah said the group is also planning to list a few of its unlisted “growth gems” in the near future. The group counts ten growth gems, and the unlisted seven include companies like Last Mile Mobility, farm machinery, aerostructures, Classic Legends, Susten (a solar business), and Accelo (a vehicle recycling business).
The group already has a presence in seven of the ten high-potential sectors propelling India’s growth.
It, however, has no presence in three segments: healthcare, infrastructure, and telecommunications.
Of these, Shah ruled out entering the infrastructure and telecommunications businesses. Within healthcare, Shah said the group may look at investment opportunities but will not invest in hospitals or pharmaceuticals. “We are evaluating options for investments and may even look at investing more in the existing sectors,” Shah said.
On electric vehicles, Shah said the company will launch six models to tap the market and launch the vehicles in the sports utility vehicles (SUVs) segment and not in the sedan segment. “We have a cell contract with Volkswagen and a contract for the purchase of motors. There were rumours of an equity tie-up with Volkswagen, but like in the past, we will explore the option if there’s any value proposition for us for an equity tie-up,” Shah said.
On the government’s plans to upgrade the skills of its young population via an internship programme, Shah said the group is targeting to skill one million women and is in talks with the Indian government to tie up with ITIs (industrial training institutes) across the country. “We see the government initiative in the budget as a statement of intent that this is important for us. The statement of intent and the catalysts hopefully make the private sector come forward and say we can do it together and that would lead to job creation, and skilling is an important area,” Shah said.
“We are already doing a lot in skilling, and our goal set up two years ago is to skill one million women a year by 2027. And we want to set up a mechanism so that some of them get absorbed,” Shah said. “We are planning to set up a platform and want other companies to join us and outline their skills and partner with us,” Shah said. In FY 2024, Mahindra and Mahindra reached over 220,000 women through skilling interventions, including employability-focused training and domain-specific skill development.
First Published: Aug 01 2024 | 8:29 PM IST