M&M revises capex by 20% to boost capacity and expand product lines

On the back of sustained growth in volumes and evolving electric vehicle landscape, Mahindra & Mahindra, the country's largest SUV maker in terms of revenues has decided to revise its capital outlay plan by 20% in its current investment cycle.

The incremental investment will go into capacity enhancement, product portfolio development, and meeting new regulations including the new electric vehicle business.

Mahindra & Mahindra will be investing close to Rs 18,000 crore in the three-year cycle of FY22 to FY44, versus its previous plan of Rs 14875 crore. This investment is allocated for automotive and farm businesses, capital expansion and investments and infusion in the electric vehicles arm. A part of those spends will also go into meeting up the upcoming regulations of safety and emissions.

Explaining the incremental investment, Rajesh Jejurikar, ED, Mahindra & Mahindra said "When we had put out the earlier investment number, we had just begun to put a broad blueprint of our EV plan, it was a rough estimate of what we needed to spend. From there on, we have evolved into say we will invest in the Inglo platform, there will be four to five top hats, now we are putting out very specific investments - at that time it was more of a broad stroke to say, this is the kind of money, we will put it in for EV, as the plans have evolved, so have the numbers."

The automotive capex has been revised higher from 20% upwards to Rs 9,500 crore, whereas investment into its Electric Vehicle Arm - Mahindra Electric Automobile Limited has seen a 50% upward revision from Rs 2,075 crore to Rs 3,200 crore.

Whereas there is a downward revision in the group companies’ investment from Rs 2,700 crore to Rs 1,600 crore, the cash flow for monetisation and partnership is being revised higher from negative Rs 2,500 crore to negative Rs 3,800 crore. This meant, there will be an effective cash deployment of Rs 15,900 crore between FY-22 to FY-24 versus the earlier plan of Rs 15,075 crore.  

The company has already committed to building a portfolio of close to half a dozen EVs in its newly formed arm, which has secured financial participation from British International Investment. M&M has set itself a target of producing and selling over 2 lakh EVs annually by 2027-2028.

As for the mainstream SUV business, M&M is already the market leader in terms of revenues and in terms of volumes, it has consistently been figuring amongst the top 2 SUV makers in the last few quarters. With the expansion in capacity and a pending order book of over 2.9 lakh units, M&M is confident of sustaining this growth momentum.