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M&M buys 55.2% stake in Reva; to up capacity 5-fold

Last updated: 26 May, 2010
Bangalore, May 26, DHNS

The company will be renamed Mahindra Reva Electric Vehicle Co

Tractors & utility vehicles giant Mahindra & Mahindra (M&M), on Wednesday, said it acquired 55.2 per cent controlling stake in electric car-maker Reva through a combination of equity purchase and fresh capital infusion.

Fresh Beginning: Mahindra Reva Chairman Pawan Goenka (left) & Technology & Strategy Chief Chetan Maini posing with a Reva car in Bangalore, on Wednesday. DH Photo

M&M will spend Rs 45 crore — Rs 15 crore for buying existing equity and another Rs 30 crore in the form of fresh capital which will be invested in the new plant of Reva in Bangalore.

The company will now be named Mahindra Reva Electric Vehicle Company Limited with M&M Automotive Sector President Pawan Goenka as the Chairman and Reva’s Chetan Maini as Technology & Strategy Chief. The new board will include five nominees from M&M, two from Maini family, and one from AEV LLC, California, co-founders of Reva and an independent director will be inducted in due course.

In the new set up, M&M will hold 55.2 per cent stake, while the Maini family and AEV LLC will hold 31 per cent and 11 per cent, respectively, with the remaining three per cent to four per cent shares with the employees.

Both Global Environment Fund (GEF) and Draper Fisher Jurvetson (DFJ), who together held 47 per cent share in Reva with an investment of $10 million each have exited the firm.

Briefing reporters Goenka said: “we will first concentrate on rolling out the two cars –– Reva NXR and NXG –– being developed on the Reva platform in the coming year,” adding that they have to go through a feasibility phase before venturing into other areas of development. The company will enhance the production capacity to 30,000 units per annum from the current 6,000 units.

While brand Reva can now leverage Mahindra’s vehicle engineering expertise, global distribution network, sourcing clout and financial support, Mahindra will have access to electric vehicle technology.

Reva presently sells its electric car in 24 countries and has sold about 3,500 vehicles globally till date out of which almost half has been exported. Besides, M&M said an electric variant of its three-wheeler commercial vehicle “Bijlee” and an electric version of its mini-truck Maxximo will hit the roads soon and that they will be developed on the Mahindra platform. Moreover, talking on the acquisition, Goenka pointed out that there is an huge potential in the electric vehicle market and with Reva being a pioneer it was clear choice for Mahindra.  Quoting consultancy firms and experts he estimated the electric vehicles market to touch 1.5 million to 2 million units by 2020 globally and 80,000 to 1 lakh units in India. He said that Mahindra Reva is eyeing a 25 per cent market share globally and about 2.5 per cent in India.

GM India likely to scrap e-car ties

General Motors India, on Wednesday, said it may pull out of its collaboration with Reva Electric Car Co following Mahindra & Mahindra buying majority stake in the Bangalore-based firm, reports PTI from New Delhi.

GM India had last year entered into a technical tie-up with Reva to develop an electric version of its popular small car, the Spark, which was scheduled to hit the roads later this year.

“We may not continue the Spark EV programme with Reva in the light of this development and will pursue our own electric vehicle programme. An announcement to this effect will be issued soon,” GM India vice-president P Balendran said.


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