M&M shifts gears to drive automotive and farm business growth

Image: Danish Siddiqui / Reuters

The well diversified Mahindra and Mahindra group has put in place a clear strategy for future growth of its flagship automotive and farm equipment business. The plan involves a three-plank strategy: globalisation, technology and customer centricity. “Our businesses are shifting their focus over the years in line with the changes happening around it,” said Pawan Goenka, Managing Director, Mahindra and Mahindra (M&M). In the past the focus was on products, cost and reach. Presently we are focusing on offering solutions, experience and a larger purpose. To achieve this, the company has embraced globalisation and a global product development network, he said at a media interaction. In the future the company will look at innovation, digitisation, new-age business models and collaboration as focus areas.

The business, he pointed out, has grown significantly over time. Between 2003 and 2016 the global volumes grew seven times, volumes outside India 29 times (aided by acquisitions), total revenue 16 times, R&D spend rose to 4.7 percent of revenues (1.9 percent in 2003), investment in product development and R&D 26 times and patent application rose to 173 in 2016 as against 1 in 2003. The company, he said, had invested Rs 4,200 crore for 12 acquisitions since 2008. It has set up the Mahindra Research Valley near Chennai for cutting edge product development at a cost of over Rs 1000 crore. These investments will help fuel growth in the future, he added. He also said that he sees five businesses within M&M which have a potential for a revenue of $ 1 billion and more. This includes agriculture, farm mechanisation, Africa, Mahindra USA and Power train.

The company, it appears, is already well on its way in implementing its three-plank strategy. For the farming business it has rolled out MyAgriGuru app which not only helps the farmers with weather reports but also links them to experts. It has even invested in a startup Merakisan – a farm to fork e-commerce portal. It is also looking at leveraging modern technology like artificial intelligence, data analytics, telematics and robotics. “We want to create farmer prosperity,” Ashok Sharma who heads the business said.

Similarly in the farm equipment space the company has made some significant acquisitions to get access to technology and markets.  It plans to enter newer markets such as Turkey, Egypt, Mexico and Brazil. It is also rationalising its product development strategy by setting up centres of excellence. “By December2017 M&M will have a 85:15 share of revenue between tractors and non-tractors income (currently it is 96:4) and share of revenues from India and outside will be equal (presently 70:30) in the next few years,” said Rajesh Jejurikar who heads the farm equipment business.

The company is focusing on offering better customer service and value to drive the sales of its trucks and buses. It has offered a series of guarantee’s to that effect – mileage, service reach and spares availability. “We will also plug the product gap by rolling out intermediate commercial vehicles (between 6 to 16 tonne capacity),” said Rajan Wadhera, head of the trucks and bus segment. In the automobile segment too the company is offering a lot of innovations to attract the customers and offer them a better experience. The company which is a market leader in the utility vehicle space is focusing on further expanding its leader there.

Goenka also said that the company is leveraging the expertise of its associate companies such as Ssangyong to further its product development capabilities.  The company is involved in joint engine development, new platform development, electric vehicle and other advance technologies with Ssangyong, he added.