In a movement to reshape the landscape of commercial vehicles of India, Mahindra & Mahindra Ltd (M&M) announced that it would buy a participation of 58.96% in SML Isuzu LTD (SML) for RS 555 crore. The agreement, concluded at RS 650 per share, also includes an open offer compulsory under SEBI buyout regulations.
The acquisition marks a daring thrust of Mahindra to strengthen its presence in the commercial vehicle segment of> 3.5 tonnes, where it currently holds a market share of 3%. By absorbing SML’s activities, Mahindra plans to immediately double its participation at 6%, ambitions reach 10-12% by FY31 and 20% or more by FY36.
Founded in 1983, SML Isuzu commanded a strong position on the Indian truck and buses market, especially in the intermediate bus segment of light commercial vehicles (ILCV), where it holds a share of 16%. During fiscal year 24, SML declared operating income of RS 2,196 crosses and an EBITDA of RS 179 crore, supported by profitable operations, frugal manufacturing and solid engineering capacities.
“The acquisition of SML Isuzu marks an important step in the vision of the Mahindra group to provide 5x growth in our emerging activities,” said Aish Shah, CEO of the group and MD of the Mahindra group. “This acquisition is aligned with our capital allowance strategy to invest in high potential growth areas that have the right to gain and have demonstrated operational excellence.”
Under the agreement, Mahindra will buy the participation of 43.96% held by Sumitomo Corporation and a separate participation of 15% of Isuzu Motors Ltd. This decision should unlock substantial synergies between cost structures, brand leverage, manufacturing efficiency and product portfolios.
“SML brings a solid heritage, a faithful clientele and a portfolio of credible products which completes the existing offers of Mahindra in the segment of trucks and buses,” said Rajesh Jejurikar, Executive Director and CEO, Auto and Agricultural Sector, Mahindra & Mahindra Ltd. “Together, we are well posed to evolve quickly and stimulate profurtible growth.”
The transaction, awaiting the approval of the Competition Commission of India, should end in 2025. Kotak Investment Banking advises Mahindra on financial aspects, while Khaitan & Co is his legal advisor.
