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Mahindra enters into asset transfer agreement with Mahindra Electric Automobile

Mahindra enters into asset transfer agreement with Mahindra Electric Automobile

An investment of up to Rs 1,200 crore will happen on the fulfilment of condition precedent, and is expected to be completed not later than March 31, 2024.

Business Today Desk
Business Today Desk
  • Updated Feb 22, 2023 10:13 AM IST
Mahindra enters into asset transfer agreement with Mahindra Electric AutomobileMahindra enters into asset transfer agreement with MEAL

Mahindra & Mahindra has entered into an Asset Transfer Agreement with Mahindra Electric Automobile Limited (MEAL) for transfer of certain assets pertaining to the latter. The transfer of the balance assets will be completed by June 30, 2026. The company said that the investment of Rs 1,925 crore in EVCo by British International Investment (BII), an investment partner to businesses, as announced in July 2022, would take place in two or more tranches.

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An investment of up to Rs 1,200 crore will happen on the fulfilment of condition precedent, and is expected to be completed not later than March 31, 2024. The balance investment of Rs 725 crore would be based on the milestones being achieved by July 1, 2024. 

“The total Investment of the company in the said assets classified as capital work in progress as per the audited Financial Statements for the year ended 31st March, 2022 is approximately Rs 230 crore, which constitutes 0.6 per cent of the total net worth of the Company as of 31st March, 2022. Considering that the identified assets are still capital work in progress, the revenue generated by such assets for the financial year ended 31st March, 2022 is Nil,” it said in a filing. 

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MEAL was incorporated on 25th October, 2022 as a wholly owned subsidiary of the Mahindra in India, to undertake the 4-Wheel Passenger Electric Vehicles Business. 

British International Investment (BII), last year announced that it would pump in Rs 1,925 crore into a four-wheel passenger electric vehicle company to be set up by Mahindra & Mahindra. BII and Mahindra & Mahindra executed a binding agreement for the investment into a wholly-owned subsidiary of Mahindra that will be newly incorporated. 

The companies, in a statement, said that the investment of Rs 1,925 crore will be in the form of compulsory convertible instruments at a valuation of up to Rs 70,070 crore, resulting in a 2.75-4.76 per cent ownership of BII in the EV company. 

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The EV company will focus on four-wheeler electric vehicles. The total capital infusion for the company is expected to be around Rs 8,000 crore between FY24 and FY27. 

The companies plan to bring in like-minded investors in the EV company to match the funding requirement in a phased manner. The investment by BII is in line with the government’s aim to accelerate the availability and adoption of electric vehicles in the country.

EVCo will leverage M&M’s  manufacturing capabilities, product development, design organisations along with the ecosystem of suppliers, dealers, and financiers of the automaker. The funds will be used to create a world-class electric SUV portfolio with advanced technologies. 

Also read: Anand Mahindra lauds Indian Army's support in quake-hit Turkey

Published on: Feb 22, 2023 10:13 AM IST
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