The growing dispute between Canada and India has started to affect businesses. Business tycoon Anand Mahindra amid escalating tensions has made a significant decision regarding his company, Mahindra & Mahindra. This Indian company with an 11.18 percent stake, has decided to end its partnership with the Canada based Rayson Aerospace Corporation. This move comes at a time when diplomatic tensions between Canada and India are at their peak leading some to speculate about its connection to the ongoing disputes. It’s important to note that Mahindra & Mahindra made this decision voluntarily.
Mahindra & Mahindra has divested its 11.18% stake in Rayson Aerospace following the Canadian company’s announcement of its business closure in Canada. The closure of Rayson Aerospace will not significantly impact Mahindra’s operations. However the timing of this decision raises questions due to the ongoing tensions between India and Canada.
Mahindra & Mahindra informed the Securities and Exchange Board of India (SEBI) about its decision stating that Reson Aerospace Corporation, its subsidiary based in Canada has voluntarily ceased its operations. In return for ending its partnership with Rayson Aerospace, Mahindra will receive 2.8 million Canadian dollars, equivalent to approximately Rs 28.7 crore.
This development has been publicly disclosed by Mahindra & Mahindra to the stock market. Rayson Aerospace Corporation is set to close its Canadian operations as of September 20 with all necessary documents filed for approval.
Reson Aerospace Corporation, the Canadian subsidiary, was primarily involved in developing technology solutions related to agriculture, while Mahindra & Mahindra manufactures farming related products. Although this decision is not expected to significantly affect Mahindra’s overall business, it has had repercussions on the company’s shares.
The impact of Mahindra & Mahindra’s decision is evident in its stock performance. The company’s shares experienced a 3 percent decline, dropping from Rs 1584 to close at Rs 1575.75. This decline in share value resulted in a one-day loss of Rs 7200 crore for the company.
This situation underscores the growing impact of diplomatic tensions on business operations. In 2023, the trade volume between India and Canada is expected to reach 8 billion dollars. Over 30 Indian companies have investments in Canada, while Canada’s Canada Pension Fund has investments in 70 Indian companies. Any further escalation of tensions between the two countries could potentially have adverse effects on their economies.