Sowing Seeds For Success Bears Fruit for Future
Recently Mahindra & Mahindra has rallied quite a bit due to its recent successful launches such as Scorpio- N and XUV 700.But apart from these successful launches there were few steps taken by the company in 2020
The company in 2020 had record losses from its subsidiaries due to which the company’s profits were deteriorating such that it almost fell by 97%. In order to solve these issues the company decided to reallocate its capital in 2020.The company set target of generating Return On Equity (ROE) of about 18% from 0.5% in FY20. The company took the following decision to achieve the targets
· Subsidiaries which will generate return on equity of 18% .M&M will stay invested in these subsidiaries.
· Subsidiaries with unclear path to profitability but are strategic. M&M will continue investments in such subsidiaries
· But Subsidiaries with unclear path to profitability. M&M will liquidate its investments.
As you can see in the image due to these decisions the losses from subsidiaries decreased and Return on equity kept increasing .
The Next target which the company is set is to achieve EPS growth of 15-20%
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