Business Standard

M&M, investors to put Rs 875 cr in Classic Legends over next 2-3 years

CLPL revived heritage brands like Yezdi and Jawa. However, it has been able to gain significant market share in the premium segment, which is still largely dominated by Eicher Motors' Royal Enfield

Mahindra and Mahindra, M&M

Mahindra and Mahindra, M&M

Sohini Das Mumbai

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Auto major Mahindra and Mahindra (M&M) said on Wednesday that it will spend Rs 875 crore along with external investors in its two-wheeler unit Classic Legends Private Ltd (CLPL) over the next two to three years.

In a regulatory filing, M&M said that it will invest Rs 525 crore, and the balance Rs 350 crore will come from existing shareholders and also new investors. However, the company did not divulge details on who these new investors are.

CLPL will use the proposed investment of Rs 875 crore to build a strong business that leverages the strengths of M&M and its partners, the company said.

“Post the aforesaid investment(s), the Company would continue to hold 60 per cent of the paid-up equity share capital of CLPL and CLPL would continue to be a subsidiary of the Company,” the notification further said.

CLPL makes the Jawa, Yezdi and BSA bikes.

M&M’s decision to invest in the two-wheeler business comes at a time when its peers are focusing on premium bikes. Domestic bike makers like Hero MotoCorp have tied up with premium bike manufacturers like Harley-Davidson, while Bajaj Auto has tied up with Harley Davidson.

CLPL has revived heritage brands like Yezdi and Jawa. However, it has been able to gain significant market share in the premium segment, which is still largely dominated by Eicher Motors’ Royal Enfield.

The premium bikes (engine capacity over 250 cc priced above Rs 1.5 lakh or so) market in India is estimated to be around 700,000-800,000 units annually. Royal Enfield enjoys the lion’s share of this market now.

Mahindra joined hands with Anupam Thareja, founder of Phi Capital and real estate baron Boman Irani in 2018 to resurrect the iconic Czech motorcycle brand Jawa, and then Yezdi. While M&M owns 60 per cent in CLPL, Thareja and Irani own around 20 per cent each.

CLPL relaunched these retro bikes in 2019 as cool or cult bikes. They are selling a combined 4,500 motorcycles a month. The company told Business Standard in September that it is poised to make a profit by March next year.

Thareja had worked with Royal Enfield earlier, part of the team that revived the company’s motorcycles. Since 2008 he has been running his own company, Phi Capital. Similarly, Irani’s father Rustom Irani who along with Farrokh Irani manufactured the Jawa brand in India in the 1960s under a licensing agreement between the Czech company that owned the Jawa brand and Ideal Jawa India Ltd.

In September, Thareja had told Business Standard that CLPL had so far invested Rs 1,000 crore and planned to invest another Rs 1,000 crore in the next three years to take the motorcycles to all over India and even overseas.

The new investment will be made in tooling for new products, marketing, distribution setup for international markets, and new product development. This amount will come from a combination of internal accruals, existing shareholders, and external investors. “We have M&M’s Pithampur plant near Indore to make half a million bikes a year," Thareja had said.

Jawa and Yezdi, however, had a promising start – the website crashed due to heavy traffic on the first day of booking. Supply chain disruptions etc caused issues thereafter. The Covid-19 pandemic also hit. The company has also launched BSA motorbikes in the United Kingdom, catering to the premium segment.

“To build these bikes… It is not only about production but also about passion. We have learned that if you are in the classic vehicles business, then the people who lead it must be passionate about it,” Anand Mahindra, chairman, M&M told Business Standard in a September meeting. Drawing a parallel with M&M's popular lifestyle sports utility vehicle, Thar, Mahindra had said the motorcycles would similarly cater to a niche segment that prefers to go out on long and adventurous rides.

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First Published: Dec 13 2023 | 6:41 PM IST

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