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Wednesday, June 07, 2006

M&M to offload equity in tourism arm before IPO

Auto and farm equipment major Mahindra & Mahindra, M&M, is planning to sell shares in Mahindra Holidays & Resorts India, Mahindra Holidays, before its initial public offering, reports Business Standard.

The IPO of Mahindra Holidays, the tourism arm of the company, is likely to take place in the second half of this financial year.

M&M has an option to place 15-49% of the group companies with private financial institutions, said sources close to the company.

The Mahindra Holidays IPO will be followed by that of the group’s IT arm Tech Mahindra. Sources indicated that the group would resort to private equity placement prior to listing in this company as well.

However, Bharat Doshi, executive director, M&M declined to comment. “We will take appropriate decision at an appropriate time,” he said.

Mahindra Holidays is planning to raise about Rs 50-100 crore (Rs 500-1000 million) through private placements. Another Rs 100 crore (Rs 1 billion) is expected to be raised from the IPO, it is learnt.

“The proceeds from the private placements and the IPO will be primarily be utilised for acquisitions in US, Middle East and South East Asia,” said sources.

Mahindra Holidays recently set up a marketing office in US called Mahindra Holidays US. It has also set up representative offices in UAE and Kuwait in the West Asia.

Mahindra Holidays has reported a net profit of Rs 20.84 crore (Rs 208.4 million) for the year ended March 31, 2006, a growth of 126% compared to net profit of Rs 9.22 crore (Rs 92.2 million) reported in the previous year.

The company’s gross revenue grew by 48% at Rs 156.73 crore (Rs 1.56 billion), compared to Rs 106.15 crore (Rs 1.06 billion) reported in the previous year.

Tech Mahindra has plans to raise cash to fund expansion in US, UK and Australia.

M&M today informed the BSE that it would sell up to 5.32% stake in Tech Mahindra, TML, a subsidiary of the company, through IPO.

Recently, the company’s board cleared spending of up to USD 300 million on overseas acquisitions. This month, Tech Mahindra set up its Noida development centre employing 2,000 people at an investment of Rs 100 crore.

The Noida centre is the sixth development hub for the company after Chennai, Bangalore, Mumbai, Pune and Kolkata.

Tech Mahindra has reported a net profit of Rs 235.4 crore (Rs 2.35 billion) for the year ended March 2006, a growth of 130%. The company’s gross revenue grew by 31% at Rs 1,242.7 crore (Rs 12.42 billion).

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