The decision by UK-based development finance institution, British International Investment (BII) to invest ₹1,925 crore in a new EV company being set up by Mahindra & Mahindra is a confirmation of the group’s vision for the business, says Anish Shahi, MD & CEO, Mahindra Group. Part:
What does this deal mean for M&M?
For us, this deal truly unlocks a value for our shareholders. We have a large global investor coming in to see what’s down our path, what our products are, and saying ‘yes, we think you’re on a leadership path here’. So that’s really what it means to us.
Where will the electricity business take place?
Mahindra Electric had a lot of things that we added back to the main company. We wanted a clean slate to begin with. So, in that sense it will be the first spin-off; It is meant for passenger four wheelers only and it is going to be light to property. All manufacturing, product development will be in M&M and will be used by this EV company. This company may also use the M&M brands; It can develop its own brand. And the rest remains in electric M&Ms, that is, three wheelers and electric LCVs – which will happen in the future.
What is the investment plan for this new company?
The investment plan for FY24 to FY27 is ₹8,000 crore. Product roll-out is something we’ll be talking about in detail on August 15th. But we have a set of products, which will get started.
And the plan is to have 5 products, including 4 native electrics?
this is right.
How will you fund capex?
Today, our cash generation is strong enough to take care of that company. And we have excluded that part of the capital also. So this deal is not just to earn money for yourself, [but] Price to unlock and … also to set up an appraisal. And to bring a very strong partner who can help us with many things as we move forward.
You talked about achieving leadership in the passenger EV four wheeler segment. Presently, Tata Motors is led by… What do you believe?
We are very confident based on the success of our current products as consumers will see the present in totality. There is one aspect to the electric car. And if you look at the five blockbuster launches we have had, it gives us a lot of confidence in our manufacturing capabilities and our engineering skills to be able to develop world class products.
Second, on the power front, we have actually developed a fair amount of capabilities there. And that aspect of the answer you’ll get on August 15th, when we talk specifically about what a forum is. Why is this a very developed platform.. What cars are coming out, the range of cars that will come out in full sequence. So that gives us a lot of confidence that we are on the path to taking the lead.
And having the support of someone like BII helps them a lot to say that, yes, we are on track.
What assets are coming into the new company?
So, it’s going to be asset light. Right now work is going on on Passenger Electric. We will move to a new company and the valuation of the property will happen in the next three or four months. And at that point, we’ll have a better understanding of what that assessment will be.
The company’s strategy of reinventing classic vehicles has worked well. What’s happening across the company as a whole, and what’s the way forward?
Really excited. Because we have seen a lot of success not only in auto business but also in our tractor business. It has gained market share. Agricultural machinery has started gaining market share, Mahindra Finance has done very well. Tech Mahindra is improving and is on a very good track. All other businesses are also in good shape now. Today, there is a lot of enthusiasm in many businesses. And we are seeing the value creation story moving forward. Because it is more important for us to fulfill what we have been told. And the results will come out.
Your subsidiary Automobili Pininfarina had to introduce the electric hypercar Battista. When will it hit the road?
Sales of the Batista will begin in the next three months or so by the end of it. We are currently in the final stages of production. And that’s the focus right now, which is to finish production, get sales and deliver sales, which will help us get returns for investors.
Will only 125 cars be produced and sold globally?
no we haven’t [decided], This is something we will see over the lifetime of the vehicle. But now we have got a good number of orders. So, as we kick off production and start perfecting them, we’ll have a better understanding of what the per year trajectory is. The car is worth €2 million. So, in the next three to six months, we will have a better idea of the number of units for that particular year.
What is the situation with respect to chip supply?
Chip shortage is now reduced. There is no problem from the standpoint of some China COVID-related lockdowns, which affected some parts to come. This affected production to a lesser extent by a small percentage.
What is the demand scenario for passenger vehicles?
For us, it’s too strong. For other companies, I haven’t seen those numbers yet. But at least what we’re seeing in bookings for all of our core vehicles, especially all new ones, we see very strong numbers at this point.
How many new product introductions are planned for the core business?
For the core business, nothing in the immediate future, I mean, fresh and things that are to come, but nothing that is brand new in the near future, because we just got five new launches. And now the focus is on Electric. So the next set of new launches from the brand will be electric.
What is the broad focus area in M&M?
Sustainability is very important to us. And that is also a major reason for us to have BII as a partner. So, it is a step forward in translating our commitments to action, in terms of doing something concrete.