Fueled by a significant spike in demand for its SUVs and strong electrification push, Mahindra & Mahindra has increased its mid-term capital expenditure for automotive and farm equipment business by 27% or ₹3,400 crore to ₹15,300 crore till FY24.
It has raised its capex for the automotive business by ₹2,900 crore and another ₹400 crore for the tractor business.
The incremental investment into the auto business will be to increase capacity for its much sought-after SUV XUV 700 and new models in the pipeline including new Scorpio N and also its EV business. Whereas ₹400 crore spike in capex for farm business will get into the new plant expansion, said Group CFO Manoj Bhat at the Q4 post earnings conference.
“Considering the strong demand, M&M is witnessing the models that have been built into capex projections going forward. We are going to increase capacity in XUV 700 and other models. As for Farm, we are setting up a new plant and the increased capex is towards the new facility,” added Bhat.
This money will be spent in the next two years alone. The company is also expecting over ₹2,500 crore from monetising its non-core assets, which will fund this incremental capex apart from reducing investment into group companies, some of which have become self-funded, claimed Bhat.
Even as the company is delivering over 5,000 units of XUV 700 on a monthly basis, the booking momentum is almost double and the cancellation rate to at a respectable 12.5% claimed Rajesh Jejurikar, ED at M&M.
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With a mix of ICE vehicles-turned EVs and ground up EVs, the OEM wants to more than make up for the lost opportunities. Electrified versions of XUV300 and KUV 100 are set to be among the first set of models. The strategy for a new start in for-wheeler electric vehicles is expected to be announced in the UK on August 15, 2022.
“The new electric XUV300 will be launched in Q1 of the calendar year 2023. It will be a good sized product, being 4.2 meter in length,” said Rajesh Jejurikar, executive director, M&M on Monday at a virtual press conference to announce the Q4 FY22 financial results.