- The Year So Far And The Way Ahead For Mahindra & Mahindra: In Conversation With Pawan Goenka
AJ:How has been the year for Mahindra & Mahindra (M&M) in terms of sales?
PG: Overall, the car industry so far has grown by around 6-7 percent. Our passenger car segment has grown by around 10 percent in the first half of 2015, while the UV segment has degrown. Truck category has seen a good growth of around 40 percent, but the small commercial vehicles have degrown. In the two-wheeler segment scooter are performing well and has grown from the last year, however motocycles has degrown. The biggest setback was from the tractor industry, which has degrown by 20 percent, which is the highest since 2003. This was majorly due to the bad monsoon. In the second half so far the industry is maintaining similar growth rate as the first half and Mahindra & Mahindra’s utility vehicle segment has been following the industry. The heavy truck segment has grown by 40 percent, while, the small commercial vehicles has been showing go promise mainly due to the success of Jeeto. In this segment we have a market share of 30 percent.
AJ:How do you see the automotive wing of Mahindra growing over the next few of years?
PG: Mahindra & Mahindra, which is the automotive wing of the Mahindra Group contributes almost 65 percent of the Group turnover, hence it’s a crucial business for us. Our aim is to grow the utility vehicle segment, which includes brands like Scorpio, Bolero among others, from the present 36 percent to around 40 percent in the next one year. Further, in the heavy commercials vehicles (HCV) segment we target to double our market to around 5-6 percent from the existing 2.6–2.7 percent, over the next two to three years. We are a relatively new player in the HCV segment M&M entered into the HCV segment some three years back. The company will look to expand the market share on the basis of its products as well as expansion of network. This apart, new product launches are expected to further bolster the segment. Going forward, the main volume driver for the homegrown auto major would continue to be the utility vehicle (UV) segment followed by small commercial vehicle and pick-up segments.
AJ:So how exactly would you focus on the CV segment, are you planning any new product?
PG: M&M plans to invest Rs 300 crore to develop new products in the 9-16 tonnes category in heavy commercial vehicle, while Rs 200 core to be invested in existing products in the 5-7 tonnes category. The new truck in the 9-16 tonne category should be ready in two and a half years time and will help us enter into the space where we are not present at the moment. Besides, we would also upgrade our existing product in the 5-7 tonne category. All these should help us reach our aim to double our market share in the heavy commercial vehicles space in two to three years.
AJ:Mahindra & Mahindra had inked deal with Mitsubishi Agricultural Machinery (MAM). What is the proposition and outcome of this deal?
PG: Mitsubishi Agricultural Machinery (MAM) is a USD 3-4 million company. We have invested around Rs 159 crore and have bought 33.33 percent stake in the company. Three M&M directors were appointed to the board and we have received a third of the voting rights. The partnership will help to introduce a new range of tractors for our company. Further, MAM will bring in a lot of value and help M&M explore markets like ASEAN and eastern Europe as Mitsubishi is a strong brand there.
AJ:What are M&M’s investment plans?
PG: M&M makes capital expenditure of Rs 2,500 crore in every financial year on an average in automotive and tractor segments. This includes the Rs 500 crore investment in the CV segment. Of this we will invest Rs 300 to develop new products in the 9-16 tonne category in heavy commercial vehicle, while another Rs 200 core will be invested in existing products in the 5-7 tonne category. Further, we are looking to set up spare part distribution centres in Rajasthan’s Jaipur and West Bengal’s Kharagppur, pumping in about Rs. 300 crore. The distribution centres will be regional hubs for catering to North and Eastern India.
AJ:Share some more light on your investment in West Bengal?
PG: Mahindra & Mahindra will set up a spare parts distribution hub for eastern and northeast India at Kharagpur in West Bengal. We are setting up a sprawling spare parts distribution hub at Kharagpur on a 13 acre plot at an investment of around Rs 150-200 crore. The physical work has already begun and we would commission the facility in next one-and-a-half year. See, we have a host of popular cars ranging from small cars to extra utility vehicles (XUV) such as Scorpion, Bolero, Xylo and Renault Verito etc. Mahindra Tractors too is very popular among farmers. As of now, the spares for all these vehicles are supplied from its central hub at Pune in Maharashtra and hence this consumes time in transition. Thus the company is now setting up a few regional distribution centres at important locations. The Kharagpur hub is a part of our regional distribution centre project under which we are setting up two-three regional hubs that will cater to a specified region. Kharagpur hub will supply spares to Odisha, Bihar, Jharkhand, West Bengal and the eight northeast states. Similarly, we are setting up another hub in Jaipur that will cater to north India.
AJ:How has been M&M’s electric vehicles performing? What are you plans for them?
PG: I feel the FAME (Faster Adoption and Manufacturing of Electric vehicles) scheme by the Centre will give impetus to this segment. So far we have sold around 100 electric vehicles, Mahindra e2o. Wherein, cities like Bangalore, Delhi, Pune has drawn maximum volumes. Beginning March-April 2016, we would start exporting Mahindra e2o to the UK and Europe. Presently, Nepal is the only foreign country where the company has exported around 50 units of Mahindra e2o. We are also working on four-door electric vehicle for Europe. Meanwhile, electric version of Maxximo is also on the cards.
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Autojunction in conversation with Pawan Goenka, Executive Director, Mahindra & Mahindra on the company's plans, investments, performance and products.
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