M&M may spin off LCV, transport solution units

Mahindra & Mahindra Ltd (M&M), the country's largest tractor and utility vehicle maker, is considering spinning off its transport solution and light commercial vehicle businesses into a separate entity.

An M&M spokesperson told Business Standard that the board of directors of the company would discuss the proposals of transferring the two businesses to a separate corporate body tomorrow. He, however, did not divulge the rationale of the proposed move on the plea that the company was yet to decide on the issue.

"The board will meet tomorrow to take a call on the issue. The company will immediately make it public, if a decision is taken, " he added.

The automotive business, comprising light commercial vehicle and multi-utility vehicles, recorded turnover of Rs 4,568.16 crore last year. The farm equipment business stood at Rs 2,029.88 crore.

Sources close to the development said the spin-off move, if adopted by the board, would be ratified by the shareholders through postal ballot in accordance with section 192A of the Companies Act, 1956.

They added that the M&M board would also consider a bonus issue tomorrow. The company, last year, recorded a net profit of Rs 512.67 crore.

M&M has recently acquired Amforge Industries' Chakan forging unit and the company had approved investing up to Rs 140 crore ($32.2 million) in its subsidiary Mahindra Automotive Steel Pvt. The Chakan unit will be merged with Mahindra Automotive Steel.

Industry sources said the company might demerge Mahindra Automotive Steels and would list the same with the stock exchanges.