Multinational vehicle manufacturer Mahindra & Mahindra Ltd will sell its vehicle services business to an arm of the Chennai-based TVS group.
In a stock exchange filing, the company said its subsidiary – Mahindra Holdings Ltd – will sell 100% of the paid-up equity share capital of Mahindra First Choice Services Ltd to TVS Automobile Solutions Pvt Ltd.
It will also sell its entire stake of optionally convertible redeemable preference shares in Auto Digitech Pvt Ltd to the TVS unit.
The company will receive Rs 21.5 crore for its Mahindra First Choice stake and Rs 13.5 crore for the optionally convertible shares held in Auto Digitech -- that’s a full consideration of Rs 35 crore ($4.74 million at current exchange rates).
In a statement, Mahindra & Mahindra said it will also pick up a stake in TVS Automobile Solutions. It expects both sales to be completed by the end of February next year.
The sale is expected to help the two companies to combine their capabilities to organise the “highly fragmented automobile aftermarket services” segment in the country. It is also expected to provide value to customers, employees, channel partners, and other stakeholders.
“We would take this opportunity to bring thousands of entrepreneurs onto a digital platform wherein they can benefit from digital technologies across marketing, diagnostics, customer experience, quality parts, and access to training and digital payments,” TVS Automobile Solutions director R Dinesh said.
Mahindra First Choice operates a pan-India chain of multi-brand car and two-wheeler service workshops. It also has a presence in the private label spare parts segment and has a technology platform – DearO – focussed on workshop management. Per Mahindra & Mahindra’s filing, Mahindra First Choice posted a turnover of Rs 106.52 crore for the 2019-20 financial year.
TVS Automobile Solutions operates myTVS, a multi-brand independent automobile aftermarket brand that offers solutions across the aftermarket value chain. According to VCCEdge (www.VCCEdge.com), the data research arm of Mosaic Digital, TVS Automobile Solutions posted consolidated net sales of Rs 1,052.01 crore for the 2018-19 fiscal, with net losses of Rs 9.95 crore.
Investors in TVS Automobile Solutions include Mumbai and UAE- based Kitara Capital, as well as Japan’s Mitsubishi Corporation.