Mahindra Group Eyes Restructuring: Tractor, EV And Truck Divisions May Split Into Separate Firms

Mahindra Group is exploring a restructuring that would transform its tractor manufacturing, passenger vehicle (including electric vehicles) and commercial truck operations into separate, independent companies, The Economic Times has reported.

The reorganisation comes days after the recent decision of Tata Motors to split its passenger and commercial vehicle divisions. Reports suggest Mahindra's contemplated restructuring as a strategic value-creation initiative designed to provide greater transparency for investors, strengthen financial discipline and enable more nimble business operations.

Internal Deliberations Underway

According to sources, as quoted by the report, Mahindra & Mahindra (M&M) is conducting preliminary internal assessments to determine whether transforming its primary business divisions into autonomous entities would be viable. The company has experienced robust expansion across both its automotive and agricultural equipment segments over the last five years, solidifying its market leadership in SUVs and farm tractors.

"The focus is to be future-ready and make all businesses independent. That helps unlock the business potential and helps scale," a senior executive close to the development told the publication. 

Auto Division Dominates

It is estimated that the automotive division currently accounts for approximately two-thirds of M&M's market capitalisation, which exceeds ₹3,400 crore. A demerger could enable more focused capital distribution strategies and potentially enhance overall market valuation.

Shift In Revenue And Profit Contributions

Between fiscal year 2021 and fiscal year 2025, M&M's automotive segment demonstrated remarkable growth. Its share of total revenue expanded from 35 per cent to 57 per cent, while its contribution to earnings before interest and taxes (EBIT) surged from 13 per cent to 42 per cent.

The farm equipment division saw its revenue share decline from 33 per cent to 22 per cent, with EBIT contribution falling from 74 per cent to 27 per cent during the same period.

SUV sales more than doubled, reaching 5.5 lakh (550,000) units, while tractor sales increased to 4.24 lakh (424,000) units over the five-year period.