Mitsubishi Mahindra Agricultural Machinery Co (MAM), an associate company of Mahindra & Mahindra, will exit the agricultural machinery business after years of losses and a review of its long-term viability.
Mahindra had bought a 33% stake in Mitsubishi Agricultural Machinery in May 2015.
The move is a part of the broader strategy Mahindra Group has been pursuing of exiting non-core, loss-making businesses to improve capital allocation and boost return on equity for shareholders over the past five years. The tractor-to-technology group has exited over 15 businesses since 2020 as part of the restructuring.
This is Mahindra’s second exit from a farm equipment maker in less than six months. Last October, the Mumbai-based company sold Sampo Rosenlew Oy, a Finnish manufacturer of combined rice harvesters it had acquired in 2016, to a Turkish company.
The board of MAM has approved a plan to withdraw from the research and development, production, and domestic and overseas sales of agricultural machinery. However, the company will continue to supply spare parts and provide warranty services for its existing products to minimise disruption for customers, M&M said in a regulatory filing on Monday.
MAM plans to cease production and sales of agricultural machinery by the first half of FY27. Businesses other than the continuing spare parts and warranty operations will thereafter be dissolved and liquidated in line with applicable Japanese laws.
The decision follows sustained financial stress at the associate. Despite multiple structural measures aimed at restoring profitability, MAM has remained loss-making. After assessing changes in the domestic and global industry environment, evolving demand patterns, and production-related constraints, the company concluded that it would be difficult to sustain the business in a stable manner going forward.
For the year ended March 31, 2025, MAM reported revenue from operations of ₹2,094.17 crore. After eliminating intercompany transactions with the Mahindra Group, it contributed ₹1,786.03 crore, or 1.13%, to M&M’s consolidated revenue. The associate posted a net loss of ₹227.42 crore for the year. After adjustments, this translated to a negative contribution of ₹151.61 crore, or 1.17%, to the group’s consolidated profit after tax. Its net worth stood at negative ₹17.74 crore as of March-end 2025.
M&M said on completion of the liquidation process, the promoter group would no longer have to fund the associate’s annual losses.
MAM added that it will provide reemployment support to employees affected by the withdrawal, while continuing spare parts supply and warranty support for customers.
Source: Economic Times