Govt capex, rural demand may spur M&M's ride: MD & CEO Anish Shah

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

With the Indian government increasing its spending on infrastructure to record highs and rural demand picking up due to the good monsoon so far, sales of Mahindra & Mahindra (M&M) are expected to pick up pace in the coming months, Anish Shah, M&M Group’s chief executive officer and managing director, said.

“We are seeing early signs of recovery in the rural markets. We are seeing government spending and margins getting better. Our estimate for the full financial year for tractor sales is a 5 per cent increase for the entire financial year (2024-25/FY25) versus last year. With the monsoon reasonably good overall, we are on track to achieve 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 (auto) division capacity by three times in the past four years and will add additional capacity this year as well.

Between FY25 and 2026-27, the group will deploy Rs 27,000 crore in its auto business, with Rs 14,000 crore in internal combustion engine vehicles and Rs 12,000 crore in the electric vehicle (EV) 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 10 growth gems, and the unlisted seven include companies such as small carrier Last Mile Mobility, Farm Equipment, Aerostructures, Classic Legends, Susten, a solar business, and Accelo, a vehicle recycling business.

The group already has a presence in seven of the 10 high-potential sectors propelling India’s growth. However, it has no presence in three segments: healthcare, infrastructure, and telecommunications.

Of these, Shah ruled out entering the infrastructure and telecommunications businesses, and within healthcare, he 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 EVs, Shah said the company will launch six models to tap the market and launch the vehicles in the sport utility vehicle segment of the market 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 1 million women and is in talks with the Indian government to tie up with 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 will hopefully make the private sector come forward and say we can do it together, and that would lead to job creation and skilling, which is an important area,” Shah said.

“We are already doing a lot in skilling, and our goal set up two years ago was to skill 1 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, outline their skills, and partner with us,” Shah said.

In 2023-24, M&M reached over 220,000 women through skilling interventions, including employability-focused training and domain-specific skill development.