The automobile major has decided to transfer its Rs 160-crore inter-trade division as a going concern to its wholly-owned subsidiary, Mahindra Exports, with effect from April 1, 1999. The ash handling division is also being transferred to group company Mahindra Ashtech.

Besides, the company has already transferred its equity holding in IT and telecom ventures to Mahindra Information Technology Services, which will now be the group holding company for future investments in the infotech sector.

``The activities of the inter-trade division are not related to the main activities of the company and its contribution to the overall performance is also of not much significance,'' the company said. The transfer of the inter-trade division is subject to approval of shareholders and regulatory authorities. The consideration for thetransfer will be determined on the basis of valuation report by reputed chartered accountants.

The Rs 40-crore ash handling systems unit, which M&M had been planning to hive off into a joint venture company, is now being transferred to wholly-owned subsidiary Mahindra Ashtech. The acquiring company plans to come out with a rights issue to part-fund the purchase, while the balance will be funded through debt. The ash handling division is engaged in the business of design, fabrication, assembly and erection of ash handling systems and allied equipment for thermal power plants. M&M had come close to signing pact with a UK-based company, but the deal did not finally materialise. It is understood that a search is still on to rope in an international joint venture partner for the project.

As a result of the equity restructuring of the infotech businesses, Mahindra British Telecom, Mahindra Applied Systems Technology and Mahindra Networks have become subsidiaries of MITS.

Mahindra Exports, to which theinter-trade division will be transferred, will pay the consideration by way of allotment of shares and debentures. Mahindra Exports is engaged in export trade and M&M's inter-trade division will provide synergy to its operations.

The inter-trade division, which contributes around 4 per cent to the company's turnover, was set up to focus on international trading. It has arrangements with Japanese trading majors like Mitsubishi and Nissho Iwai Corporation for marketing flat steel products in India. The activities of the division were expanded over the years to include import and export of steel, a value chain through steel service centre operations and also the machine tools business.

``The strategy being worked on is to clearly focus on trading and derive the maximum benefit from opportunities available internationally. It will bring about greater synergy with other businesses within the Mahindra group and enable the company to focus on its core activities,'' the company has said.

During 1998-99,Mahindra Exports' engineering and garments agency divisions performed reasonably well, although the export activities were adversely affected due to the financial upheavals in the Asia Pacific region.

Firm to enter factoring

Automobile major Mahindra & Mahindra has decided to make a foray into the business of factoring. The company also drawn up plans to venture into securitisation of movable and immovable assets.

The company will be seeking the approval of the shareholders to effect a change in the objects clause of its memorandum of association.

According to the amended objects clause, the company intends ``to carry on the business of factoring agents, the business of securitisation of any moveable, immoveable, tangible, intangible fixed assets or current assets and receivables, setting up special purpose vehicles or entities for conducting the business of securitisation and conduct of any business or activity connected therewith.''