M&M getting out of the tunnel, says MD

Mahindra & Mahindra is not only witnessing light at the end of the tunnel after taking an impairment charge of Rs 840 crore due to ailing subsidiaries but is also “seeing us getting out of the tunnel,” said managing director Anish Shah. In an interview with ET, Shah said lockdowns to contain the second Covid-19 wave have derailed business recovery and uptick will depend on the business environment in June. Edited excerpts:Will the lockdowns impact your performance this quarter?It will impact everyone. April was a rather good month overall. Covid-19 had started (rising) in Maharashtra in early April but the government made sure that plants could operate. The rest of India really hadn't gotten into a tough situation yet, so demand was fairly strong as well.May, however, was a very tough month. Rest of India too got impacted and even in Maharashtra things got worse. There was high absenteeism at plants and there were more supply chain issues. So, May is going to be a pretty tough month for everyone across the board.The key question is what happens in June. How quickly do we ramp up? We're starting to see positivity in terms of infections going down in many parts of the country. If we at least go back to where we were in January and February, I think that'll be a pretty good situation for us.Do you see light at the end of the tunnel in terms of provisions and write-offs?We are seeing us getting out of the tunnel, more or less… We've come down from Rs 3,500 crore (in exceptional charges) last year to Rs 840 crore this year. Of this Rs 440 crore is for SsangYong.As we didn't go through the pre-packaged resolution plan, we wanted to make sure we were being realistic in terms of what we could get back and therefore we put a provision of Rs 440 crore for SsangYong…and we are only left with Rs 220 crore of exposure (in SsangYong) for equity and debt. We've written down everything else. And (provisions for) others have also started coming down because a lot of it was due to the restructuring this year — we've done it for MANA (Mahindra Automotive North America), Automobili Pininfarina, and a few other shutdowns … we don't expect impairments to be a big number going forward.What’s the worst-case scenario for SsangYong?The board has been dissolved and the court has appointed a liquidator for the company. We are not involved at all. The scenarios for SsangYong are, one — there is a buyer that comes in and takes the company forward, and the court will then decide what happens to the debt and equity holders. The second is that there is no buyer, and the court liquidates all the assets. The asset value is fairly high, which is why we've kept Rs 220 crore on our books. That would be the worst-case scenario... we are very hopeful that there will be some buyer.Which three of your growth gems are the best poised for growth?First is farm machinery. Second is going to be e-vehicles and last-mile mobility. For the third one, it's a tough choice to pick, but I would say logistics at this point in time. That's one industry that is going to grow significantly in India and we've got a good business there.

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