With auto, IT and more, the Mahindra Group is aggressively rolling out its billion-dollar projects in the lucrative US market.
The Mahindra Group plans to invest $1 billion (around Rs 6,500 crore) across business verticals in the US over the next five years. With this investment, the diversified automobile company aims at doubling revenues from the American market to $5 billion (about Rs 32,500 crore).
The Mumbai-headquartered group, which currently employs around 3,000 people in the US, also plans to double the headcount over the next five years as it looks to expand operations. "We have so far invested around $1 billion in the US among all the businesses, and we should invest another billion over the next five years," reveals Mahindra & Mahindra (M&M) Managing Director Pawan Goenka.
The quantum of investment, however, will depend on various factors, like market conditions and success of various projects that are currently underway in the US, he adds. Elaborating on various strategic projects, Mr Goenka discloses that the company has bid for a US postal service contract, and if it comes through, it will help the company grow exponentially in the country.
The $19-billion (nearly Rs 1,22,000 crore) group currently generates around $2.5 billion (around Rs 16,250 crore crore) from its seven business verticals in the US. The major group companies active in that country include IT major Tech Mahindra and Mahindra USA, which sells tractors and utility vehicles. The group is also present across various other verticals, including aviation, electric two-wheelers and supply chain.
Mr Goenka adds that the company's growth will be led by various factors, like launch of a new offroad vehicle by its subsidiary Mahindra North America Technical Centre (MNATC), besides other group entities. He elaborates that the growth will be led by Mahindra USA and Tech Mahindra.
Auto, IT, etc
The automobile company is targeting huge success of the Mahindra brand in the US as this accomplishment in the USA will mean recognition in various other geographies. "Building the Mahindra brand in the US is very important for us because it is the place everyone looks up to. The brand which gets successful in this market gets automatic recognition in so many places," points out Mr Goenka.
He admits that Tech Mahindra, like all other Indian IT companies, faces visa issues and is working on resolving the matter. "Other than IT business where there are both locals and people brought in from India, none of our other businesses has huge number of Indians (brought) to the US for work," notes Mr Goenka. He further adds: "The company's objective has never been to bring in people from India. We have invested here, we have employed people here, and thus, we have not really been impacted by the new polices."
After being nudged by the Trump administration, Indian IT companies, including Tech Mahindra, have now been focusing on local hiring. In fact, Tech Mahindra has been recruiting from colleges in the US, and this year, it plans to add around 2,200 people in the country, which remains its biggest single market in the world.
M&M chief denies facing any discrimination in the US. "There is no discrimination that I can think of in
conducting business in the US. Laws and taxes are the same for everyone. I don't see any kind of disadvantage for Indian multinationals here," clarified Mr Goenka.
The company is readying two new models by the end of the next financial year as a part of its plans to consolidate its position in the Indian passenger vehicle segment. M&M, which sells utility vehicles, ranging from compact KUV100 to XUV500, also has plans to introduce a new electric vehicle in the next two years.
"We have two products coming in the next two years. One is the U321 (code name) multi-purpose vehicle (MPV) which has been developed on the new global platform developed here in Detroit. It will come out during this financial year," discloses Mr Goenka.
The new vehicle is expected to compete with the likes of Toyota Innova and Tata Motors Hexa in the Indian market. The second vehicle is codenamed S201, which is based on the SsangYong platform Tivoli. It is likely to come out in the next financial year. Both the vehicles are set to be launched in India first, and the company could consider introducing them in other geographies as well.
M&M sells nearly 18,000 passenger vehicles per month in the domes-
tic market, and its market share has been consistent at around 8 per cent for the last few years. "In the last couple of years, we have not grown market share, but similarly, we haven't lost either. Clearly, every company will wish to grow its market share, and for that, we need to ensure that our current products continue to do well and bring in volumes," points out Mr Goenka.
The Mahindra Group is looking at establishing four models it currently has in its portfolio of electric vehicles before bringing in a new product. The group does not have any plans to launch passenger vehicle operations in the US, where it has faced various issues in the past. The company had to face some lawsuits in the US, which have all been settled now. In 2010, its exclusive American distributor had filed a lawsuit against the company "for taking too long" to launch a pickup truck in the country. Currently, M&M is focusing more on off-road vehicle in the USA rather than going in a big way to launch on-road utility vehicles.
The automobile company has also redrawn its strategy on its twowheeler business. "We are changing strategy as far as the two-wheeler business is concerned. We are moving away from the commuter segment to high-end premium bikes, and we are working on bikes based on BSA and Yezdi brands," adds the M&M chief. He, however, has declined to give a timeline for launch of new products.
The Mahindra Group has consolidated its position in the Indian market as a leading automobile company. With growth in the domestic market accelerating at a rapid pace, the diversified automobile company is looking beyond Indian shores, focusing especially of the US market. With auto, IT and more, the Mahindra Group is aggressively rolling out its billion-dollar plans in the lucrative American market.
"Building the Mahindra brand in the US is very important for us. The brand which gets successful in this market gets automatic recognition in so many places." PAWAN GOENKA Managing Director, M&M
Tech Mahindra plans to add around 2,200 people in the US, its biggest single market in the world.