Mumbai: Mahindra and Mahindra Ltd is planning to invest a record Rs15,000 crore over the next three years, said managing director Pawan Goenka on Tuesday after announcing the tractor maker’s Q4 results.
Of the intended investment, Rs10,000 crore will be classified as capital expenditure for expanding capacity for its utility vehicles, tractors as well as commercial vehicles, in addition to product development.
Goenka is “cautiously optimistic" about the automobile industry’s performance in 2018-19 on the back of a positive economic environment, stable inflation and interest rates, and expectations of a normal monsoon, though rising crude oil and commodity prices may play spoilsport.
He expects “the momentum of FY18 to continue into this fiscal" with tractors, passenger and commercial vehicles posting growth upwards of 10%.
While Mahindra’s usual practice was to set aside about Rs10,000 crore every three years, the increment this time around accounts for various developments like the “sustainable luxury car brand" Automobili Pininfarina, the off-roader Roxor being developed for the US market, new products being planned for the global tractor segment, and compliance with Bharat Stage VI emission norms, Goenka said.
The company is covered in terms of capacity as per its internal planning but expects demand to outstrip its expectations across segments this fiscal, according to Hemant Sikka, chief purchase officer, automotive and farm equipment, at Mahindra.
In response to rising demand in FY18, Sikka undertook a debottlenecking exercise at Mahindra’s plants about six months ago and has resolved “most" issues. At present, most capacity constraints are being faced by Mahindra’s suppliers, especially for higher tonnage trucks, Sikka said.
“Issues regarding vendor capacities will be resolved within three to four months with the current visibility that businesses are giving us," he added.