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Mahindra to Acquire Stake in SML Isuzu to Boost Truck Business

SML Isuzu Ltd will be purchased out by Mahindra and Mahindra Ltd. for a sum of Rs 555 crores, which will be paid to Sumitomo Corporation and Isuzu Motors Ltd. This purchase is bound to have a result for the entire fleet of commercial vehicles manufactured by Mahindra, considering that the company's ownership stake in SML is to be increased by 58.96%. The makers of the two heavy-duty Isuzu-branded trucks and multi-utility vehicles that operationally belong to SML are to change hands. Further, with the existing stake of 54% in SML, Mahindra will seek to purchase the remaining 650 crore IPS shares from the public corporation and offer additional shares to Mahindra, which constitute 26% of the open equities. This initiative is aimed at having acquired before May 2025, according to the custom of Mahindra and Mahindra Ltd.

A Strategic Move for Mahindra Trucks

The deal is certainly a decisive shift for Mahindra in the heavy-duty vehicles industry. Mahindra has been reported to have over a dozen participants in the LCV segment, in which it has a dominant market share of more than 52 percent and an astounding record of being the most appreciated Light Duty Car-LDC commercial vehicle among fleet owners. His market share in the category is over 3.5, however languishing relative to the 3.5 ton market coming in at an estimated 3 percent value.

By obtaining this acquisition, Mahindra wants to immediately increase their market share in the 3.5T segment to 6%. The company wants to increase this market share to 10-12% by the year 2031, and further increase it to more than 20% by the year 2036.

SML Brings Strong Potential

SML Isuzu was a great name that was founded in 1983. For the financial year 2024, the company reported revenue of Rs 2,196 crore and an operating profit (EBITDA) of Rs 179 crore. They appear to run a profitable business with efficient manufacturing and reputation for quality.

By combining forces with SML, several advantages can be gained for Mahindra trucks such as cost reduction, shared dealer networks and service networks, joint product development and better use of the manufacturing plants. Moreover, Mahindra plans to leverage its strengths in technology, design, and sourcing to aid the support and growth of SML trucks.

Leader’s Remarks

The acquisition has been described as a big step in Mahindra’s journey by the Group’s CEO and MD, Dr Anish Shah. It fits perfectly with our strategy to invest in businesses with strong growth potential and operational strength,” he noted.

In regard to the deal, Rajesh Jejurikar, Executive Director and CEO of Mahindra’s Auto and Farm Sector, remarked that it will help us to become a full-range player in commercial vehicles. He went on to explain that SML has a strong history, trusted products and good market reach. Together, we can scale faster and grow profitably.

What Is Coming Up

All deals, including the standing offer, will proceed after receiving the clearance from the Competition Commission of India and the requisite regulatory bodies. The whole exercise is likely to be done by 2025.

Kotak Investment Banking has been appointed the financial advisor by Mahindra, while the legal advisory role has been assigned to Khaitan and Co.

About Mahindra Group

Formed in 1945, the Ahindra Group is among the Indian business groups operating in more than 100 countries. Dominantly involved in the manufacture of tractors, farm equipment, utility vehicles and financial services, it also has strong businesses in renewable energy, logistics, IT and real estate. The construction conglomerate has a clear focus on sustainable development for holistic rural and urban living by means of technological and social innovation.

Final Thought

This addition enhances Mahindra trucks’ competitive edge among the Indian commercial vehicles. Now, with SML trucks, Mahindra has greater capacity and expanded range to serve the burgeoning demand for trucks and buses across the country.

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