As I stated on the "other" board, the concern here should be whether any disease has "infultrated" the "wound area". As you previously stated, at least some of the area where the bark is "removed" is spongy. This is telling me that there is more damage than just cosmetic (and as I had said I had a Mallika with very similar damage). To avoid further damage down the road and in an attempt to protect the life of the tree, I would recommend cutting the main trunk of the tree below the damage. Below the damaged area but as high above the graft as possible.
I would hate to see the tree grow to a size/age where it was producung with larger limbs and have the limbs split and peel away from the tree at the damagaed area, causing possible irreparable harm to the tree. Better to take care of it now and have to wait a year to recover than to wait two or three years, have the tree get damaged, and then have to wait another year or two (or three) for the tree to regrow.