MUMBAI: It began with SsangYong and Genze, and it certainly wouldn’t stop there. The Mahindra & Mahindra Group is on a spring-cleaning drive that will likely see exits from a number of loss-making units and divisions. The extensive divestment roadmap may involve either complete closures or stake sales so that the automotive major has a healthier balance sheet at the end of this fiscal. People close to the development said overseas subsidiaries are under the scanner: The tractor business in Turkey and Peugeot’s two-wheeler venture in France, where M&M has met with little success, may not get more funding support from Mumbai. Other businesses likely to face the axe include Mahindra Marine (yacht), Mahindra Aerospace and its truck business — diversifications that do not have a strategic fitment or have been loss making over the years.Return on equity M&M told ET in a mailed response that there is no pre-conceived list of companies to be divested. “We have initiated detailed evaluation of international subsidiaries and will categorise those with a clear path to 18% RoE in 3-5 years, unclear path to 18% ROE, but a strong quantifiable strategic benefit and unclear path to profitability with limited strategic benefit,” the company said in response to ET’s queries. Deputy managing director Anish Shah earlier announced the decision to stop investments in Korean automaker SsangYong and electric two-wheeler business Genze. SsangYong reported a loss of Rs 2,108 crore in FY20. Mahindra in February decided to exit step-down subsidiaries — Divine Solren, Neo Solren and Cleansolar — for a consideration of Rs 329 crore. Its FY20 annual report showed that some of the larger loss making units were Mahindra USA at Rs 507 crore, Mahindra Tractor Assembly at Rs 222 crore, Mahindra two-wheeler Europe at Rs 231 crore, Mahindra Aerospace at Rs 320 crore, Pininfarina at Rs 105 crore and Peugeot Motorcycles at Rs 244 crore. However, Mahindra may not touch the US businesses immediately. 76900987Overseas businessesMahindra Aerospace specialises in development of aircraft and airplane components. The company designs and manufactures utility aircraft and provides comprehensive aerostructures. GE Aviation, a unit of General Electric, and Mahindra Aerospace have an agreement to build single-aisle planes. Mahindra North America was conceived in 2017, four years after M&M set up a technical centre in the US. Roxor was an off-road vehicle conceived, designed and engineered by Mahindra Automotive North America. At the earnings conference call, Shah said that if there isn’t any clear path toward profitability in a reasonable time frame, then Mahindra may be taking action on the business as well. The tractor industry in Turkey has grown 60% this year and the company sees an increase in demand from Erkunt Tractor Company. The demand trend in the farming sector visible in India is being mirrored for its companies based in Turkey, Brazil and the US.Enhancing stockholder value“The bold decision by the new management to exit loss making entities will improve return ratio and improve the confidence of investors, resulting in re-rating for the next 2-3 years,” said Mitul Shah, VP-Research, Reliance Securities. Although Mahindra Electric, Mahindra Agri Solutions and Mahindra First Choice made losses of Rs 55 crore, Rs 19 crore and Rs 38 crore, respectively, in FY20, these would continue to be funded because of their strategic importance.Mahantesh Sabarad, retail head, SBICap Securities, said it will take a long time for Mahindra to come out of bleeding subsidiaries in the current business environment.M&M’s stock has lately climbed, moving from a 52-week low of 2Rs45.