Sri Lanka set to benefit greatly from Mahindra’s success

With the shares of the Anand Mahindra-led, Mumbai-headquartered Mahindra & Mahindra Ltd. surging more than 2% to hit an all-time high, steering the automaker to join the club of Rs. 1 lakh crore market capitalisation on the Bombay Stock Exchange, Sri Lanka stands to benefit, asserts Ideal Group Founder Chairman Nalin Welgama.

“Sri Lanka will benefit because M&M will soon be setting up their automotive assembly plant as a result of the Joint Venture entered into with Ideal Motors Ltd., a fully-owned subsidiary of the Ideal Group, to assemble automotive vehicles in Sri Lanka,” said Welgama. 

A jubilant Welgama reiterated the fact that the spinoff benefits as a result of M&M’s achievement in India would greatly benefit Sri Lanka, providing an impetus to the local automotive industry as well as serving to position Sri Lanka as a venue for many more automotive giants to open plants in the country. 

Interestingly, Mahindra & Mahindra Ltd. is now bigger than the Tata group’s carmaker Tata Motors, in terms of market capitalisation. The heavyweight shares of Mahindra & Mahindra Ltd were among the top six gainers on BSE Sensex and the fifth-largest contributor in uplifting the benchmark index on Tuesday.

Shares of Mahindra & Mahindra Ltd. rose as high as 2.23% to a lifetime peak of Rs 819.1 on Tuesday. The stock of Mahindra & Mahindra Ltd. opened 1.72% higher at Rs. 815 in the early morning deals this week on BSE. 

Following the sharp surge in the share prices of Mahindra & Mahindra Ltd., the market capitalisation of the auto giant saw a rise of Rs. 2,225 crore (approximately) to Rs. 1,01,829 crore at the record high share price. Mahindra & Mahindra Ltd. held a market capitalisation of Rs. 99,604.59 crore as Tuesday’s closing price of Rs. 801.2 on BSE.

With the breaching of the Rs. 1 lakh crore mark in the market capitalisation, Mahindra & Mahindra Ltd. went above Tata Motors in market capitalisation. 

Notably, Mahindra & Mahindra Ltd. became India’s second-largest automaker in terms of market capitalisation on Tuesday and was only behind Maruti Suzuki, as far as the automakers are concerned. Other than Mahindra & Mahindra Ltd., the companies which recently joined the 1 lakh crore club are IndusInd Bank, Bajaj Finance and Asian Paints (in 2017).

On the contrary, a decline in the share prices of Tata Motors led the company to lose the Rs. 1 lakh crore market cap club on Monday. Tata Motors held a market capitalisation of Rs. 97,866.68 on the basis of the closing price of Rs. 338.95, as per the data available with the exchanges. 

The market capitalisation of Tata Motors diminished further on Tuesday following a drop in share prices. Tata Motors shares slipped as much as 1.73% to a day’s bottom of Rs 333.1 on BSE while the market capitalisation of company tripped to Rs. 96,120 crore at the day’s low prices.

“Mahindra will hold a 35% stake in the JV, while Ideal Motors will have a 65% stake. Ideal Motors has been a trusted Mahindra distributor for the last nine years, and with this joint venture Mahindra will strengthen its presence in the country. The plant will be developed over the next one year under the expertise of the Mahindra team, and will incorporate global technologies,” said Welgama.

Sri Lanka is one of Mahindra’s top three export markets, and the new facility will not only contribute to human capital development, but will also enable collective development of local automotive components manufacturers to international standards under the global expertise of Mahindra. 

“This is a leap forward for the industry, adding value to the meaning of ‘Made in Sri Lanka’ and opening broader opportunities for national growth. M & M’s phenomenal achievement represents a quantum leap for both our companies, building the foundation for newer opportunities for both of us and setting the sky as our only limit,” said Welgama.