No Final Call Yet on How SML Mahindra Will Bankroll Its Next Phase

SML Mahindra has not decided whether it will fund its next phase of growth; including electric vehicle development through debt or an equity raise, executives said, leaving open a question that investors asked repeatedly during a briefing following the company's board approval to acquire Mahindra & Mahindra's Truck and Bus Division (MTBD).

The Rs. 525 crore consideration for the MTBD acquisition, subject to working capital adjustments, will draw on SML's balance sheet at a time when commercial vehicle manufacturers across the industry are ramping up electrification investment. Asked directly how the company planned to finance that spending given the cash outflow for the deal, executives declined to commit to a specific instrument.

Funding Route Still Undecided, Say Executives

"We'll leave that to the SML board to decide what's the right call for SML," Vinod Sahay, executive chairman, SML Mahindra Ltd and Amarjyoti Barua, Group CFO, Mahindra Group noted during a conference call with analysts and media on Wednesday.

"SML also has a very strong balance sheet that really has [room] to leverage debt," the executives said. "The board of SML has to decide what is the right way to go, and whatever they decide, we will support as a group company — whether it's a debt raise at the lowest cost possible or if it is an equity round, whatever instrument is used."

MTBD Deal Details and Strategic Context

The Board of Directors of SML Mahindra Limited (SML) on Wednesday approved the acquisition of Mahindra Truck and Bus Division (MTBD) from Mahindra & Mahindra Limited (M&M) on a slump sale basis. The transaction is expected to be completed during FY2027. The acquisition marks a significant milestone in SML's growth journey and represents a strategic step for Mahindra Group towards creating a unified Truck & Bus business with a comprehensive presence across light, intermediate and heavy commercial vehicles, as well as buses in the >3.5T CV segment.

The development follows M&M's acquisition of a 58.97% stake in SML Mahindra Limited (formerly SML Isuzu Limited) from Sumitomo Corporation and Isuzu Motors Limited on August 1, 2025, and the subsequent mandatory open offer, the proposed transfer of MTBD to SML is a natural next step in creating a simplified operating model with sharper market focus, enhanced scale and improved competitiveness.