Mahindra & Mahindra to Invest Rs 12,000 Crore in Electric Vehicle Unit

 Photo Source: www.mahindraelectricautomobile.com

Mahindra & Mahindra Ltd (M&M) announced on May 16 an investment of Rs 12,000 crore in its electric vehicle (EV) unit, Mahindra Electric Automobile Limited (MEAL), over the next three years, up to March 31, 2027.

Investment in MEAL

Mahindra Electric Automobile Limited, a subsidiary of M&M, was incorporated on October 25, 2022, in India. For the year ending March 31, 2024, MEAL reported a total income of Rs 56.96 crore and a net worth of Rs 3,207.14 crore. Notably, the revenue from operations for FY24 was nil.

Company’s Strategic Rationale

In a stock exchange filing, M&M explained the rationale behind its substantial investment in MEAL.

“The investment will accelerate the growth of 4 (Four) Wheel Passenger Electric Vehicles Business and to get growth capital to fund the said business. MEAL will significantly leverage the manufacturing capabilities and product development of M&M as also its ecosystem of suppliers, dealers and financiers. The funds infused by M&M will be utilised by MEAL primarily to create and market a world-class Electric SUV portfolio with advanced technologies. The investment will help M&M to leverage their focus and expertise in ESG and climate change,” said M&M.

Financial Performance and Future Goals

M&M reported a 32% increase in standalone net profit for the March quarter, reaching Rs 2,038 crore, attributed to robust automotive segment performance, a favorable product mix, and operating leverage benefits.

This is a rise from the Rs 1,549 crore reported in the same period last year. Additionally, the company’s standalone revenue from operations grew by 11% to Rs 25,109 crore in Q4FY24, up from Rs 22,571 crore a year earlier.

Board Approval and Future Capacity

The board of Mahindra & Mahindra has approved the investment of Rs 12,000 crore to support its EV journey over the next three years. This sum will be used to “create and market a world-class Electric SUV portfolio with advanced technologies.”

M&M is targeting an exit electric vehicle capacity of 10,000 units for FY25 and plans to increase this capacity by an additional 8,000 units by the end of FY26.

“The investment will accelerate the growth of 4 (Four) Wheel Passenger Electric Vehicles Business and to get growth capital to fund the said business. MEAL will significantly leverage the manufacturing capabilities and product development of M&M as also its ecosystem of suppliers, dealers and financiers. The funds infused by M&M will be utilised by MEAL primarily to create and market a world-class Electric SUV portfolio with advanced technologies. The investment will help M&M to leverage their focus and expertise in ESG and climate change,” M&M reiterated in its filing.