M&M and external partners to invest Rs 875 crore in Classic Legends

Classic Legends, the premium two wheeler division of Mahindra & Mahindra, plans to invest Rs 875 crore over the next 2- 3 years to fund its future growth. The funding for the same will be done through internal accruals by  and funds raised from external investors.

In a stock exchange announcement, Mahindra & Mahindra, which sells around 3000 to 5000 units a month said, “external investors, along with M&M will invest Rs 875 Crore (investors will invest Rs 350 crore and M&M will invest Rs 525 crore) over the next 2-3 years, to build a strong business that leverages the strengths of M&M and its partners.” 

This infusion will happen in one or more tranches in the company.

Elaborating on the structure of fund infusion, the Company on Wednesday completed the execution of a Securities Subscription Agreement and Amended & Restated Shareholders’ Agreement (“Agreements”) between the company, existing shareholders and new investors of Classic Legends Private Limited, a subsidiary of the Company (“CLPL”). 

Of the proposed investment of Rs 875 crores by way of subscription to Compulsorily Convertible Preference Shares (“CCPS”) and Equity Shares of CLPL, out of which M&M has agreed to invest of Rs 525 crore and the balance Rs 350 crore will be invested by existing shareholders and new investors in CLPL in one or more tranches in accordance with the terms and conditions as stipulated in the Agreements, added the statement from the company. 

Classic Legends which entered the premium two wheeler business in 2015 by reviving classic motorcycle brands like Jawa, Yezdi and BSA over the last eight years, has had limited success in the market place. The standalone revenue from the operations was at Rs 709.74 crore for FY23, with the company posting a loss of Rs 97 crore. 

Post the aforesaid investment(s), M&M would continue to hold 60% of the paid up equity share capital of Classic Legends and the company would continue to be a subsidiary of M&M. 

In line with the strategy for the two-wheeler business, the Company through CLPL had reintroduced the iconic brand 'Jawa' to the Indian market in the Financial Year 2019, with the launch of new range of JAWA motorcycles - Jawa and Jawa FortyTwo. 

In FY22 it gave rebirth to another classic brand 'Yezdi' with three new models at the same time – Yezdi Adventure, Yezdi Scrambler and Yezdi Roadster and 

During FY23, 42 Bobber motorcycle was introduced in Indian market and in addition, CLPL forayed into UK and European market by introducing the iconic British brand BSA. 

The Company has benefited by using its manufacturing facility at Pithampur plant and R&D facility for two wheelers of CLPL. The two wheeler business has been able to utilise the expertise of the company for manufacturing, sourcing, etc.