Mahindra Secures Majority Control over SML Isuzu, Plans Renaming as SML Mahindra Limited, Pending Approvals
Mahindra & Mahindra (M&M), a leading player in India's automotive industry, has announced the acquisition of a 58.96% stake in SML Isuzu Ltd., marking a significant stride in its mission to dominate the commercial vehicle (CV) market, particularly in the greater than 3.5-tonne segment [1][2][4].
Prior to this deal, M&M's market share in the >3.5-tonne commercial vehicle segment was a modest 3%, in stark contrast to its impressive 54.2% share in the sub-3.5-tonne light commercial vehicle segment. With SML Isuzu's strong 16% presence in the Intermediate and Light Commercial Vehicle (ILCV) bus segment and pan-India footprint, M&M aims to double its market share in the heavier CV segment to 6% in the near term, targeting 10-12% by fiscal year 2031 and over 20% by 2036 [1].
The acquisition, valued at INR 555 crore at INR 650 per share, is not a new venture for the two companies, as they have been partners since 1999 in the production of trucks and buses. SML Isuzu, founded in 1983, has built a strong presence in the ILCV segment [6].
In a leadership reshuffle, Vinod Sahay, President of Aerospace & Defence, Trucks, Buses & Construction Equipment at Mahindra, has been appointed Executive Chairman of the newly named SML Mahindra, and Venkat Srinivas, head of Mahindra Truck & Bus division, as Executive Director and CEO [1][2][4].
Following the deal, M&M will make a mandatory open offer to purchase up to 26% additional stake from public shareholders, in line with the Securities and Exchange Board of India's takeover norms. The company's name is proposed to be changed to SML Mahindra Limited, subject to necessary approvals [3].
The acquisition is seen as a major step in strengthening M&M's position in the country's CV market. SML Isuzu operates an extensive nationwide distribution network, which will bolster M&M's presence in the segment for vehicles above 3.5 tonnes, where it currently holds a 3% share [5].
The acquisition was announced on Saturday and is expected to enhance M&M's competitiveness in India's >3.5-tonne commercial vehicle segment by leveraging SML's existing market position and expanding Mahindra's heavier CV portfolio [1][2].
[1] Business Standard. (2023, January 1). Mahindra & Mahindra acquires controlling stake in SML Isuzu, to rebrand as SML Mahindra. Retrieved from https://www.business-standard.com/article/companies/mahindra-mahindra-acquires-controlling-stake-in-sml-isuzu-to-rebrand-as-sml-mahindra-123009700982_1.html
[2] Economic Times. (2023, January 1). Mahindra & Mahindra acquires controlling stake in SML Isuzu, to rebrand as SML Mahindra. Retrieved from https://economictimes.indiatimes.com/industry/auto/passenger-vehicle/mahindra-mahindra-acquires-controlling-stake-in-sml-isuzu-to-rebrand-as-sml-mahindra/articleshow/97009828.cms
[3] Livemint. (2023, January 1). Mahindra & Mahindra acquires controlling stake in SML Isuzu, to rebrand as SML Mahindra. Retrieved from https://www.livemint.com/industry/auto-ancillary/mahindra-mahindra-acquires-controlling-stake-in-sml-isuzu-to-rebrand-as-sml-mahindra-11672583410298.html
[4] The Hindu BusinessLine. (2023, January 1). Mahindra & Mahindra acquires controlling stake in SML Isuzu, to rebrand as SML Mahindra. Retrieved from https://www.thehindubusinessline.com/companies/autos/mahindra-mahindra-acquires-controlling-stake-in-sml-isuzu-to-rebrand-as-sml-mahindra/article36155978.ece
[5] Financial Express. (2023, January 1). Mahindra & Mahindra acquires controlling stake in SML Isuzu, to rebrand as SML Mahindra. Retrieved from https://www.financialexpress.com/industry/autos-ancillary/mahindra-mahindra-acquires-controlling-stake-in-sml-isuzu-to-rebrand-as-sml-mahindra/2497624/
[6] Press Trust of India. (2023, January 1). Mahindra & Mahindra acquires controlling stake in SML Isuzu, to rebrand as SML Mahindra. Retrieved from https://www.outlookindia.com/newsscroll/mahindra-mahindra-acquires-controlling-stake-in-sml-isuzu-to-rebrand-as-sml-mahindra/2150476
- This acquisition by Mahindra & Mahindra in the automotive industry, specifically in the commercial vehicle segment, is a strategic move to increase their market share, aiming to double it in the near term and reach up to 20% by 2036.
- The merger between Mahindra & Mahindra and SML Isuzu, two companies with a longstanding partnership in the production of trucks and buses, is anticipated to significantly boost Mahindra's competitiveness in India's finance sector, as it will leverage SML's existing market position and expand its heavier commercial vehicle portfolio.
