India’s Mahindra to assemble vehicles in JV with Ideal Group

Wednesday, 28 March 2018 00:00 - - {{hitsCtrl.values.hits}}

(IIFL) India’s leading automaker Mahindra and Mahindra Ltd. (M&M) has announced the establishment of a Joint Venture (JV) with Sri Lanka-based Ideal Motors Ltd. (Ideal) for assembling its vehicles in the neighboring island country.

M&M will subscribe up to 35% equity stake in the JV with the remaining stake held by Ideal and its affiliates. The acquisition is expected to be completed by April 2018. M&M’s investment in the JV would amount to LKR 25 cr (Rs. 10.41 cr, assuming the rate of Rs 0.42/LKR). M&M has already had a presence in Sri Lanka for nearly a decade. Since November 2009, Ideal Motors has been the sole authorised distributor for Mahindra Motor Vehicles and Motor Cycles.

It has sold more than 50,000 M&M vehicles in Sri Lanka to date.

The JV will further establish M&M’s position as a leading automaker in the island nation. M&M already enjoys 50% market share in the ‘above-1 ton’ category and 35% market share in the ‘below-1 ton’ category.

The combined entity (standalone M&M + subsidiary MVML) derives revenue (Q3FY18) from farm equipment (35%), automotive segment (61%) and others (4%). It is the market leader in tractors with 44% market share (Q3FY18).

On account of new launches and the normal monsoon, the management expects the tractor industry to grow at 15-18% in FY18E and 8% in FY19E. In the automotive business, M&M expects the UV segment to perform well on the back of three launches (MPV, compact SUV & Ssangyong Rexton) in FY19.

M&M plans to launch an affordable range of tractors in India (Trakstar). Tractor growth rate is expected to slow down to 8% in FY19E on the high base of FY18.

UV/LCV growth will be led by new launches, while MHCV business will break-even in FY19E, as the level of discounting reduces with increasing volumes. M&M has been at the forefront in EV space, recently committing Rs. 600 cr towards EVs and EV components and plans an additional Rs.900 cr investment by CY20.

Mahindra & Mahindra ended the day at Rs. 745, down Rs. 2.8, or 0.37%, from its previous close of Rs. 747.80 on the BSE.

The scrip opened at Rs. 746 and touched a high and low of Rs. 754 and Rs. 742 respectively. So far 32,32,172 (NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 92,965.94cr.

Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.