Automotive major Mahindra & Mahindra said on Thursday that it has no plans to demerge its auto and tractor businesses. Mahindra’s response came after reports surfaced that it is in the early stages of evaluating a major restructuring exercise to potentially spin off its tractors, passenger vehicles, and trucks into separate entities.

“The company has clarified this in the past and maintains that it sees much greater value from synergies by keeping these businesses within the M&M entity,” it said in an exchange filing. The news was first reported by The Economic Times, citing people familiar with the matter, which said that the conglomerate had begun assessing the feasibility of the restructuring exercise.

Currently, the auto and farm divisions operate as divisions housed under Mahindra Group’s flagship company, Mahindra & Mahindra. According to the people quoted, the rationale behind spinning off different businesses is to redouble its efforts towards the automotive business and pivot away from the agricultural business, which is fraught with the volatility of the monsoon. This would ensure a well-diversified portfolio.

Mahindra’s tractor business could emerge as a standalone company if the plans go through, the report said. Mahindra has led the tractor segment since acquiring Punjab Tractors in 2007. Its market share stood at 43.3% in FY25, compared to 38.2% in FY21. The report also said that the passenger vehicle arm is expected to be spun off as a focused vertical. This development comes close on the heels of Mahindra’s acquisition of SML Isuzu.

This is not the first time that Mahindra has mulled demerging its businesses. It had earlier shelved plans over concerns that a standalone tractor company could be vulnerable to takeovers, according to the report. Currently, the different divisions have distinct leadership teams and strategies. According to the executives quoted in the report, a standalone trucking business would be better suited and capital-efficient.

The development follows the successful demerger of Tata Motors, which has made its commercial vehicles a separate, listed entity. The move received overwhelming shareholder approval, and has also unlocked value. Recently, Tata Motors announced that it has appointed Shailesh Chandra, who was leading the passenger vehicle arm of Tata Motors, as the MD and CEO of the newly separated Tata Motors Passenger Vehicles.

Mahindra & Mahindra shares closed 0.28% higher on the bourses at ₹3,436 apiece.