Mahindra & Mahindra Ltd and JSW Group, are in discussions to buy a stake in Skoda Auto Volkswagen India Pvt. Ltd. They could buy a 15-20% stake, with the option to increase it later. Skoda Auto Volkswagen India made a profit of Rs 309 crore in FY23, the highest in five years.
The deal is expected to follow industry trends, valuing the company at 20-24 times its one-year forward price-to-earnings. Skoda Auto is looking to partner with local companies to use their strengths in engineering, sales, and procurement.
A Skoda Auto Volkswagen India spokesperson said they do not comment on ongoing discussions but are exploring new business opportunities in India. India is crucial to Skoda Auto’s growth strategy, helping them expand into ASEAN and the Middle East.
Skoda Volkswagen has about a 2% market share in India with around 2,500 vehicle sales per month. Partnering with M&M or JSW could help solve operational issues and make the business more profitable. Skoda might start by teaming up with a local partner to manufacture electric vehicles.
For Skoda, a partnership with M&M could provide an established distribution network and expand local manufacturing. M&M would benefit from German technology and entry into the sedan market. JSW, which already partners with China’s MG Motor, might form a separate entity with Skoda, focusing on electric vehicles. The structure of this potential joint venture is still unclear.
