Saturday, September 01, 2012

COURSE CORRECTION

It was a stellar year for M&M, as the company saw sales & profits surge phenomenally. But M&M is now equally concerned about where its numbers come from, as it diversifies into new segments & geographies via M&As and alliances. by Pawan Chabra

Ever since the Mahindra Group initiated the process of bringing the renowned Jeep to the Indian market two years before the nation got independence in 1954, the brand developed a strong association with being a tough, rugged & quintessentially Indian jeep maker.

By the time I got to see a Mahindra product for the first time (in the 1980s), a lot had changed in the Indian automobile circuit (although small fry compared to the changes happening today). For instance, by that time, Indians were preferring the Maruti 800s over the Premier Padminis and the Ambassadors, Mahindra had became a market leader in the tractors segment (a position it retains). But the one thing that remained intact was the image of M&M. However, by then, Anand Mahindra, the current MD and Vice Chairman of the Mahindra Group, was all set to take the Group to the next leap of growth. In all these years, the Harvard graduate has taken the group to new fields like IT, hospitality, retail and more recently into aerospace.

Meanwhile, M&M posted standalone net profit of `20.87 billion for the year ending March 2010, a phenomenal growth of 150% yoy; which has catapulted it to rank 34 on the B&E Power 100 list (from 64 last year). The performance was buoyed by unit sales of 2,86,713 vehicles during the year, a growth of 30% yoy. Even as UVs and tractors continue to be its mainstay in the automotive sector, M&M is attempting to taken a more holistic view of its potential and trying hard to expand its portfolio and reach.

If one analyzes the moves made by the company, over the past few years, it doesn’t takes rocket science to figure out that the strategy to acquire companies to expand its presence into new segments within the automotive industry has been an integral part of its strategy. For instance, the acquisition of the Kinetic’s assets in 2008 was done to enter into the two-wheeler segment with the latter’s infrastructure, product brands and distribution network. While the deal gave a sigh to relief to Sullaja Motwani, who was trying her level best to save a sinking ship. “Mahindra acquired the assets of Kinetic with a view to get a lap ahead in the race in the Indian two-wheeler segment,” said Pawan Goenka, President – Automotive & Farm Equipment Sector, M&M. The recently announced acquisition of Reva Electric Car Company has given the company an entry into the nascent electric car segment. The latest buzz in the domestic circuit is that the company will deploy the electric technology in a couple of SUVs in its portfolio apart from incorporating it in its LCVs range. “Mahindra and REVA now have access to Mahindra’s vehicle development technology and distribution network, significantly enhancing its ability to launch a state-of-the-art electric vehicle for global markets,” said Chetan Maini, the founder of Reva, to B&E after the deal was signed.


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