M&M, Ford to sell cross holdings before Logan launch

Mahindra & Mahindra (M&M) and its former joint venture partner Ford Motor Company may sell off their cross-holdings in each other before the launch of the first Mahindra-Renault car in 2007.

Renault is not M&M's first car-making partner. Ford ventured into India holding on to M&M's hand in 1996 and stayed on as Mahindra Ford till the two parted ways several years later.

Mahindra still holds a 15 per cent stake in Ford, while Ford has 10 per cent stake in M&M.

Anand Mahindra, vice-chairman of M&M, is a member on the Ford's board, while David Friedman is on the M&M's board.

Sources said the run-up to the launch of the Renault Logan will see Mahindra and Ford selling off their cross holdings.

Since the Mahindra-Renault JV will make its debut in the Indian car market with a C segment offering, it will make it even more important for the two (M&M and Ford) to separate as Logan will be competing with the Ford Ikon.

"The sell-off will see M&M paying Ford a substantial amount. Ford's financial and valuation details is not known. It was making losses even in the 2003-04," said an industry analyst.

The market value of a 10 per cent stake in M&M is worth Rs 618 crore at Friday's closing price. Ford officials could not be reached for a comment. M&M officials refused to confirm or comment on anything.