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Mahindra to set up base abroad, eyes 50% revenue from overseas by FY19

Mahindra & Mahindra has been aspiring to be a global player and investments of the order of Rs 4,200-crore in farm machinery and auto sectors of several countries since 2008 are part of the plan.

business Updated: Mar 02, 2017 18:04 IST
Mahindra and Mahindra,Mahindra SsangYong,Mahindra Farm Equipment
Anand Mahindra, chairman and managing director of Mahindra Group, attends a news conference in Mumbai.(Reuters file photo)

Homegrown automaker Mahindra & Mahindra (M&M) is planning to set up a second base for itself outside the country, as part of its strategy to acquire 50% of automotive revenues from overseas by fiscal 2019.

M&M has been aspiring to be a global player and investments of the order of Rs 4,200-crore in farm machinery and auto sectors of several countries since 2008 are part of the plan. The company also made the biggest buyout by snapping up over 60% in Punjab Tractors in 2008 followed by SsangYong.

“There is a need for us to have a second base outside the home market and we are working on it. But we can’t give more details now,” said a senior management member during an informal interaction with the media in Mumbai.

Rajesh Jejurikar, president and chief executive, farm equipment and two-wheelers division, said, M&M is already the no. 1 tractor maker in the world in terms of volume and is present in 30 markets, including the US, Finland, Algeria, Nigeria, Kenya, South Africa, China, Japan and Australia.

Talking about the global aspiration, Jejurikar explained that in 2015, the geographical mix of M&M’s farm machinery products stood at around 30% which rose to 37% in the current financial year. It is projected to jump to 50% by fiscal 2019.

Group managing director Pawan Goenka said both M&M and its South Korean SsangYong are working together to design engines on a common platform.

“Both the companies will develop their own product around it which is expected to be launched by the middle of 2018,” Goenka said, adding currently the company makes around 30% of its revenue from overseas.

In 2011, M&M acquired 70% stake in the then struggling SsangYong Motors for around $450 million and has turned it around since then. The two are working towards making engines for a common platform shared by both the automakers, a synergy which is expected to save about $70 million over the next five years for the group, he added.

On reports about American car major Ford is planning to collaborate with M&M in certain aspects of business, Goenka said, “I will not either confirm or deny the report. It is very common for any auto company to be in talks with four to five others for a possible collaboration or partnership. But chances of such talks fructifying remain one out of five.

Goenka further said as part of its globalisation plan, M&M is focusing on mergers and acquisitions in companies which can be beneficial in reaching their desired goals. The other areas include increasing manufacturing footprint, research & development, enhancing branding and sales infrastructure are other important focus points, he added.

Goenka further said the new strategy is christened ‘Shift @ Mahindra’ which will involve the group driving all its businesses - from agri to farm equipments to automotive divisions working together.

When asked about capex into capacity addition, Goenka said the company has invested Rs 12,000 crore into its 14 plants and has built enough capacity till 2020.

Since 2003, M&M’s revenue grew 16 times to Rs 63,300 crore in 2016 from Rs 3,900 crore, while its patents jumped from a mere one in 2003 to 173 during the same period.

First Published: Mar 02, 2017 17:47 IST