Mahindra Group on Tuesday said it has closed down its aircraft manufacturing business in Australia and is scouting for a buyer, more than a decade after venturing into high-cost plane-making business.
The decision also comes little over a year after one of the planes, manufactured at the Australian facility, crashed in Sweden killing nine persons.
In 2009, Mahindra Group acquired 75.1 per cent stake each in two Australian aerospace firms, Gippsland Aeronautics (Gipps Aero) and Aerostaff Australia, for Rs 175 crore as part of its plans to manufacture aircraft and allied components to service global market.
While Gippsland Aeronautics is into aircraft manufacturing, Aerostaff is into manufacturing aircraft components.
"We have shut down our Gipps Aero business, which was into the manufacturing of 8- and 10-seater planes in Australia," Mahindra & Mahindra Deputy Managing Director and Group CFO Anish Shah told reporters in the post-earnings media call.
"It is up for sale for someone who wants to buy it. But, if there is no buyer, the business has been shut down already," he said adding that there is no further activity in terms of manufacturing or selling new planes.
He added that for the company, the positive is that the aircraft business "is behind us because that had taken a significant amount of cash and the industry even earlier was not in a good shape".
Shah also said the Mahindra Group will, however, continue with the aerospace business, which has long-term growth potential.
"Aero structure is a separate business... It has got good long-term potential for us," he said.
Shah added that he does not expect it to be one of the company's short-term growth trips. "This is not the kind of business that will give us rapid growth in the next 1-3 years. But, this is solid business for the long term, and we would see it contributing much bigger numbers as we look at 3-5 years or 5-7 years time-frame."
The group's flagship firm Mahindra & Mahindra (M&M) on Tuesday reported an 88 per cent drop in its profit after tax (PAT) to Rs 162 crore for the second quarter ended September 30, mainly on account of the impairment provision of Rs 1,149.46 crore for certain long-term investments.
The auto major along with one unit -- Mahindra Vehicle Manufacturers Ltd (MVML) -- had reported a PAT of Rs 1,355 crore during the July-September period of the previous fiscal.
Its revenues, however, increased to Rs 11,590 crore in the September 2020 quarter, against Rs 10,935 crore a year ago, M&M said in a regulatory filing.
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