Who could have thought back in the late 1990s that Mahindra & Mahindra would overtake Tata Motors in the domestic sweepstakes? But Anand Mahindra has done it. And now, automotive and farm equipment leader Mahindra Group has set itself an ambitious goal of doubling its mobility solutions business, comprising two wheelers, passenger vehicles, heavy commercial vehicles and electric vehicles, by 2019. Auto industry analysts now marvel at how M&M has raced ahead of Tata Motors in the domestic SUV market with a slew of new offerings and a heavy dose of very smart marketing aimed at clearly identified consumer profiles.
While a significant part of this growth could come from its heavy commercial vehicle segment, the $17-billion group is also gearing up for strategic growth in its emerging segments such as financial services, farm solutions, hospitality, aerospace and defence in the next few years, as it clearly sees brighter spots even in the complex churn of the market and economy. There are challenges of course.
“In fiscal 2016 and the following quarters, there were several issues in the market and the economy that directly impacted our businesses. The environment was truly unpredictable and volatile. The group still achieved growth, though the number was slightly lower due to these events,” says managing director Pawan Goenka in an exclusive interview.
Mahindra & Mahindra with total assets worth Rs 1,07,514 crore, up from previous year’s Rs 94,376 crore, posted almost 10 per cent growth in revenue at Rs 78,016 crore in 2015-16.
The company’s automotive business recorded total sales of 4,94,096 vehicles (4,37,911 four-wheelers and 56,185 three-wheelers) in fiscal year 2016 as against a total of 4,64,850 vehicles (4,05,446 four wheelers and 59,404 three-wheelers) in the previous year, registering a growth of 6.3 per cent.
“There were many uncertainties during 2016,” says Goenka. For instance, the ban on diesel vehicles at the beginning of the year had a great impact on Mahindra as almost two-third of the vehicles in the banned category in the market were from Mahindra.
“Fortunately, we quickly found a solution to it. But soon after, the expectation of GST implementation followed. Though it is quite positive for the industry and we are looking forward to it, it kept bringing uncertainties,” he says.
“The sales of four-wheelers slightly recovered in December after demonetisation, but the two-wheeler business is yet to pick up. The market is slowly recovering. We hope that in another two months, things will be more stable. That said, 2016 was a great year for the company’s tractor business due to a fairly good monsoon. For IT too, it was an excellent period, while Mahindra Finance witnessed some instability. I saw some positive things happening in Mahindra Holidays, but the realty business had issues as is the case in general,” says Goenka summarising the year gone by.
For a few years, the Korean company Ssangyong acquired by M&M had proved to be a recurring headache. Last year, the group also turned around its South Korean carmaker Ssangyong. “Ssangyong has now become a significant business in Mahindra Group. It has become the second largest in the group with some $3.5 billion in sales; it has achieved one of the highest volumes since 2002,” says Goenka.
Going ahead, defense and aerospace will be two other priority areas for the company, particularly new opportunities in defense.
BW Reporters
Unnikrishnan is currently Senior Associate Editor with BW Businessworld at its Mumbai Bureau. During his two decades long journalistic career, he has received several media awards and recognitions. His articles on healthcare, life sciences and intellectual property rights (IPR) have been republished by several international blogs and journals.