Mahindra MD Pawan Goenka says the firm is scouting for a second home base, indicating that the facility is aimed at reducing dependence on India operations
Mumbai: Auto maker Mahindra and Mahindra (M&M) Ltd is looking to set up another base outside the country, which could be a full-fledged presence similar to its operation in India, in a bid to reduce its dependence on the local market, managing director Pawan Goenka said on Wednesday.
The utility vehicle market leader is also working on several joint projects with its South Korean subsidiary Ssangyong Motor Co. as it seeks to protect its core segment, which has been under pressure amid increasing competition from global carmakers, Goenka said at a media interaction during the Mahindra Automotive and Farm Leadership Council.
The tractor-to-technology conglomerate is betting big on markets abroad for its tractor and farm equipment business and envisages half the revenue in the segment coming from markets outside India by FY19.
“We are looking at a second home base outside India," said Pravin N. Shah, president automotive sector at the firm. The move, currently under consideration, will help the firm hedge itself from uncertainties, he said.
A full-fledged presence in another country, similar to what Mahindra has in India, will help the firm meet the demands in the region and the adjoining markets better in a cost effective manner, Shah told Mint.
“It’s going to be a big move and will involve a brick-and-mortar investment," said Shah, adding: “You never know, we may do it with Ssangyong or may do it all by ourselves."
He declined to specify a time frame or the region the company is looking at.
“It can be any country. It doesn’t have to be an India-like market. The plans are likely to be firmed up in another six-to- eight months once the management changes announced recently become effective," said another Mahindra official who declined to be identified.
To begin with, it’s only the automotive sector that will be part of the plan. The company is also working on a global product development network plan, he said. As of now, Mahindra doesn’t have a full fledged manufacturing facility outside India.
The Anand Mahindra-led group, meanwhile, is looking to get its groove back in the utility vehicle segment, with recent launches such as the TUV 3OO and KUV 1OO achieving little in recovering lost ground.
The company’s Korean subsidiary Mahindra Ssangyong and Mahindra North American Technical Center (MNATC) will play a key role in future product development, said Goenka.
Mahindra will launch two completely new UV models code named S201 and U321. The U321 will be the first model to be developed by MNATC, said Goenka.
M&M is also developing yet another platform with Ssangyong which will spin off models for both Mahindra and Ssangyong. Mahindra is also jointly working with its South Korean subsidiary on an electric car and will develop a 380 volt power train for the same, he said. M&M will partner with Ssangyong for most of the advance technologies such as weighting, connected cars etc.
Mahindra, the world’s largest tractor maker by volume, envisages moving beyond being a tractor firm to step up its play in the global farm equipment market which is estimated at $156 billion as compared with $62 billion for tractors, said Rajesh Jejurikar, president tractor and farm equipment and two wheelers, Mahindra and Mahindra.
The company’s recent acquisitions—Hisarlar Makina Sanayi ve Ticaret Anonim Şirketi (Hisarlar), a farm equipment company, which marked its entry into Turkey, one of the largest markets for farm equipment and a 33% acquisition of Mitsubishi Agricultural Machinery in May 2015—will play a pivotal role in the strategy to “globalise the business," said Jejurikar, adding that the company expects its overseas business to contribute half of its revenue by fiscal 2018-19, up from 37% in fiscal 2015-16.
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