Mahindra remains committed to ailing Truck and Bus Division

The decision to continue was taken after a comprehensive review and MD Anish Shah expects Mahindra Truck and Bus Division to start delivering strong returns in five years.  

- Ketan Thakkar

Mahindra & Mahindra, the country's second-largest commercial vehicle maker has decided to continue its support to the lossmaking Mahindra Truck and Bus Division(MTBD). This side of the business participates in the highly competitive intermediate, medium and heavy commercial vehicle business in the country.

The decision was taken after a thorough analysis of the business by the top management of the company, as it was failing to meet its internal target of 15-18 percent return on equity. In a post-earnings call, Anish Shah, Managing Director of M&M said the Mahindra Truck and Bus Division has long-term strategic importance for the company and he expects the business to start delivering returns in coming five years. “For the MTBD (business), we did a lot of detailed evaluation and we finally came to the conclusion that it is a strong business. It has a strong product set, which we can run and it can deliver return on capital. As we completed that assessment, we also realised that the carrying value of assets reflects what the reality was and hence we have adjusted as a one-time impairment,” explained Shah.

Mahindra & Mahindra took an impairment charge of Rs 630 crore on the Truck and Bus business during the Q3 earnings, which naturally impacted and pulled down the company's profit after tax.