In any business these days, there are good times and sometimes not so good times. There could be unforseen circumstances like Covid pandemic impacting the ecosystem or businesses that have just failed to deliver the desired results.
To sustain the operations and achieve business goals may require taking unavoidable or unpleasant decisions in the short-term to ensure solid foundations for the long term by management.
Mahindra & Mahindra says their mid-term targets of attaining 18 percent return on equity or ROE, 15-20 percent growth in earnings per share and creating a billion-dollar valuation of emerging businesses are well ahead of plans.
This aspect has been made possible after a series of business reviews and dropping some of the unprofitable ventures. The most recent decision in this direction was an MoU with European private equity major Mutares SE & Co, wherein Mahindra & Mahindra offloaded its controlling stake in Peugeot Motocycles.
After this happened, Anish Shah, MD of Mahindra & Mahindra said, "All problems are taken care of, Mahindra & Mahindra is now in a growth mode." This move is part of a strategic plan that was meticulously curated at the height of the Covid19 pandemic that had affected many businesses worldwide. The bold plan called for exiting loss-making units, divesting in non-core assets with an eye on reducing cash burn and prioritising prudent capital allocation to achieve 18 percent return on equity (ROE). The list may appear long and tedious to an outsider, but the process was completed as planned, according to Shah. Shad added that the group will continue to focus on financial discipline and management.
"We are in a growth mode right now. All our problems have been taken care of. We are looking to grow this business forward.
At this point, nothing else is under review. We have done a lot. We were looking at Peugeot Motorcycles closely (before the exit).
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