India's Mahindra & Mahindra (M&M) has approved the transfer of its Truck and Bus Division (MTBD) to its listed subsidiary, SML Mahindra, in a move intended to consolidate the group's commercial vehicle operations under a single entity.

Approved by M&M's board on July 29th, the transaction will be executed on a slump sale basis for Rs. 5.25 billion (US$ 55 million), subject to working capital adjustments. The business transfer agreement is expected to be signed on or before August 7th, with the transaction scheduled for completion by January 31st, 2027, subject to regulatory approvals, shareholder approval, and the fulfilment of customary conditions precedent.

The transfer includes MTBD's assets, employees, licences and liabilities.

M&M Group Chief Executive Officer and Managing Director Anish Shah said the restructuring simplifies the group's commercial vehicle business by bringing truck and bus operations under SML Mahindra, creating a single entity for the commercial vehicle business.

The restructuring follows M&M's acquisition of a 59% stake in SML Isuzu - now renamed SML Mahindra - from Sumitomo Corporation and Isuzu Motors nearly a year ago, followed by an open offer. According to the company, combining the two businesses is expected to provide a broader product portfolio, wider market coverage and operational efficiencies.

Rajesh Jejurikar, Executive Director and Chief Executive Officer of the Auto and Farm Sector at M&M, said combining the operations of SML Mahindra and Mahindra Truck and Bus would create synergies across operations, technology, research and development, and customer-facing functions while retaining the identities of both brands.

M&M Chief Financial Officer Amarjyoti Barua said MTBD would initially affect SML Mahindra's financial performance, but synergies are expected to improve profitability over time. He added that MTBD will no longer form part of M&M's standalone financial results under its current structure, while the company is also evaluating options to separate manufacturing activities to avoid any adverse impact on its standalone results.

The truck and bus division generated revenue of Rs. 29.9 billion (US$ 313 million) during FY26, accounting for around 2% of M&M's income from operations. The business was valued at approximately Rs. 4.8 billion (US$ 50.2 million) on M&M's books as of March 31st, 2026. The transaction has been classified as a related-party transaction because SML Mahindra is a listed subsidiary of M&M. However, the company stated that it is being conducted on an arm's length basis. The valuation has been determined based on a report prepared by GT Valuation Advisors.

Following completion of the transaction, M&M will continue manufacturing trucks and buses under a contract manufacturing arrangement, ensuring an uninterrupted supply while SML Mahindra assumes responsibility for the combined commercial vehicle business.

Company executives said that no immediate capital expenditure on manufacturing capacity will be required, as the existing facilities provide sufficient capacity for future production. They further added that the company has sufficient capacity to increase production at the existing plant, with any near-term growth expected to be supported by the available capacity rather than additional investment.

Additional manufacturing capacity will come from M&M's Chakan plant near Pune, which will continue producing Mahindra-branded trucks and buses under the contract manufacturing arrangement after the transfer has been completed.

Executives said the combined manufacturing footprint will enable the shared use of existing plants, dealer networks, and research and development resources instead of duplicating investments across separate organisations.

The company has also outlined plans to improve from the current standalone fifth- and sixth-ranked positions of the two businesses to become one of India's top three commercial vehicle manufacturers. Executives further added that further details regarding manufacturing capacity utilisation, production planning, and future network expansion will be announced after the transaction receives shareholder approval and the integration progresses.