Amer­i­can Plans

With auto, IT and more, the Mahin­dra Group is ag­gres­sively rolling out its bil­lion-dol­lar projects in the lu­cra­tive US mar­ket.

India Business Journal - - FACE TO FACE - MUNISH SHEKHAVAT

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.

High-end strate­gies

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.

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