M&M to raise Rs400 cr for Navistar JV

Mahindra & Mahindra is looking to raise Rs 400 crore over the next 3-6 months for the Mahindra Navistar Automotive Ltd (MNAL) joint venture, Uday Phadke, the company’s president (finance, legal and financial services), said.

The company needs another Rs 900 crore for Mahindra & Mahindra Vehicle Manufacturer Ltd (MVML).

“Funding is needed for MNAL and MVML. The investment is part of the total Rs 2,500 crore investment for the Chakan plant. We are looking at maintaining debt to equity ratio of 1:1 for this project,” Phadke said.

M&M is also looking at investing Rs 1,000 crore for capacity enhancement at its plant and  product development in order to meet the emission norms.

It needs another Rs 2,500 crore for product development.

M&M has a capex of Rs 6,500-7,000 crore for the next three years including the current fiscal. In order to fund its capex the company is also looking at divestment of its 51% stake it holds in its profitable subsidiaries, said Bharat Doshi, executive director (finance and corporate affairs), M&M.

MNAL will roll out medium and heavy trucks in the fourth quarter from the Chakan plant and some time during the current quarter M&M will roll out its own light commercial vehicle from its plant at Zaheerabad in Andhra Pradesh. The debt to equity ratio for the JV stands at 0.7:1.

Annualised capacity at Chakan is 3,00,000 units of which 2,50,000 units will be for M&M products and 50,000 for MNAL products.

Pawan Goenka, president (automotive), M&M, said, “Anything below 3.5 tonne will be a M&M product and those products above 3.5 tonne will be manufactured through the JV with Navistar.”

With respect to its product in collaboration with Renault- Logan, Goenka said they are selling 500 units a month and are looking to maintain this number in the coming months as the lower C segment in which Logan operates has remained stagnant, showing a degrowth. “We are incurring losses on this product and have downsized the business,” added Goenka.

On its farm equipment sector (FES), the company’s domestic sales rose to 38,811 units for the quarter ended, compared with 29,305 units sold in the same period last fiscal. However, Anjani Kumar Chowdhari, president, FES, said the company may have to increase prices if raw material rates continue to rise. “There has been 1%-1.5% increase in raw material prices and we expect them to increase 4-5% by the end of the fiscal.”