Mahindra & Mahindra

AUGUST 4
Author: Kumar Viplove (A064)
SAP ID: 80501170067
NMIMS Navi Mumbai
Company: Mahindra & Mahindra
STRATEGY FORMULATION &
IMPLEMENTATION

2 | P a g e
TABLE OF CONTENT
S.No. PARTICULARS PAGE NO.
1. Part A
Year and country of establishment
Vision, Mission & Core values
Major milestones so far
Joint Ventures
Acquisitions
Divestments
Countries in which present today
Turnover in last 3 years
3
3
4
5
6
7
7
10
2. Part B
Industry Analysis
Company Strategies for competitive
advantage
Strategies to overcome imitation,
substitution, holdup and slack
12
13
15
3. Part C
Relative SWOT Analysis (w.r.t.
Tata Motors)
16
4. Part D
Financial Analysis and performance 19
5. Part E
Diagnostic Analysis and Strategic
Recommendations
23
6. References 25

3 | P a g e
Part A
YEAR AND COUNTRY OF ESTABLISHMENT: -
➢ Year: 1945 (73 years ago)
➢ Industry: Automotive
➢ Country of Establishment: India (Ludhiana)
VISION STATEMENT: -
To create India's largest automobile and automobile-related products distribution network by
providing dealers and customers with the largest choice of unique world-class products and
services.
MISSION STATEMENT: -
“We don’t have a group-wide mission statement. Our core purpose is what makes all of us want
to get up and come to work in the morning”
-ANAND MAHINDRA
CORE VALUES: -
➢ Good Corporate Citizenship: We will continue to seek long term success in alignment
with the needs of the communities we serve. We will do this without compromising on
ethical business standards.
➢ Professionalism: We have always sought the best people for the job and given them
the freedom and the opportunity to grow. We will continue to do so. We will support
innovation and well-reasoned risk taking but will demand performance.
➢ Customer first: We exist and prosper only because of the customer. We will respond
to the changing needs and expectations of our customers speedily, courteously and
effectively.
➢ Quality focus: Quality is the key to delivering value for money to our customers. We
will make quality a driving value in our work, in our products and in our interactions
with others. We will do it 'First Time Right.'

4 | P a g e
➢ Dignity of the individual: We will value individual dignity, uphold the right to express
disagreement and respect the time and efforts of others. Through our actions, we will
nurture fairness, trust, and transparency
MAJOR MILESTONES SO FAR: -
➢ Mahindra touches new milestone, produces 50 lakh vehicles.
➢ Grew 4x compared to industry in LCV >3.5T Segment.

5 | P a g e
➢ Achieved highest ever Market Share in Tractor Industry
➢ The Mahindra Scorpio is an SUV manufactured by Mahindra & Mahindra Ltd. It was
the first SUV from the company built for the global market- June 2002.
➢ The Mahindra Scorpio Getaway is slotted in the pick-up truck segment. The Getaway
is a new category creating offering from the Scorpio stable – June 2007.
➢ The Mahindra Bolero is an off-road vehicle produced by Mahindra & Mahindra –
2000.
➢ Mahindra's XUV 500 secured first place in the 2014 Desert Storm Rally - one of
India's toughest tests for both man and machine. The car also clocked the fastest time
in three sections of the rally.
➢ Thar was launched in the Indian market on October 4, 2010to fill the void left by its
predecessor the Mahindra MM540. The Thar has been voted one of the top 10 SUVs
available in the Indian market.
➢ In 2006, the Reva became the world's best-selling Electric Vehicle and by 2008, the
company managed to sell over 950 Reva electric cars, making it the UK's best-selling
electric car of all time at that time.
JOINT VENTURES: -
➢ Mahindra started making passenger vehicles firstly with the Logan in April 2007 under
the Mahindra Renault joint venture.
➢ M&M made its maiden entry into the heavy trucks segment with the Mahindra Truck
and Bus Division, the joint venture with International Truck, USA.

6 | P a g e
➢ Mahindra produces a wide range of vehicles, including MUVs, LCVs and three-
wheelers. It manufactures over 20 models of cars, including larger, multi-utility
vehicles like the Scorpio and the Bolero. It formerly had a joint venture
with Ford called Ford India Private Limited to build passenger cars.
➢ The company has built and assembled military vehicles, commencing in 1947 with the
importation of the Willys Jeep that had been widely used in World War II. Its line of
military vehicles include the Axe. It also maintains a joint venture with BAE Systems,
Defence Land Systems India.
➢ Mahindra Tractors manufactures its products at four plants in India, two in Mainland
China, three in the United States, and one in Australia. It has three major subsidiaries:
1) Mahindra USA
2) Mahindra (China) Tractor Company
3) Mahindra Yueda (Yancheng) Tractor Company (a joint venture with the Jiangsu
Yueda Group).
ACQUISITIONS: -
➢ In September 2017 Mahindra and Mahindra Ltd acquired Erkunt Traktor Sanayii AS, a
Turkish tractor maker and its foundry business for ₹800 crore.
➢ In January 2017, Mahindra and Mahindra Ltd (M&M) acquired a 75.1 equity stake in
Hisarlar Makina Sanayi ve Ticaret Anonim Şirketi (Hisarlar), a farm equipment
company, marking its entry into Turkey.
➢ In October 2014, Mahindra and Mahindra acquired a 51% controlling stake in Peugeot
Motocycles.
➢ M&M also has a controlling stake in the REVA Electric Car Company[10]
and acquired
South Korea's SsangYong Motor Company in 2011.

7 | P a g e
DIVESTMENTS: -
➢ Mahindra Holidays: Mahindra & Mahindra divests 7.5% stake in Mahindra Holidays
for Rs274 crore.
COUNTRIES ENTERED: -
1) Asia Pacific: -

9 | P a g e
3) Middle East & Africa: -

10 | P a g e
4) The Americas: -
COMPANY’S TURNOVER: -
i) F2015 - M&M Standalone results
The Gross Revenues and other income of Mahindra & Mahindra Ltd for the year ended
31st
March 2015 is Rs. 41982 crores as against Rs. 43838 crores in the previous year. The Net
Profit after exceptional items and tax for the current year is Rs. 3321 crores against Rs. 3758
crores in the previous year.
The Board of Directors has recommended a dividend of Rs. 12 (240 %) per share of face value
Rs. 5.00 which will absorb a sum of Rs. 846.89 crore inclusive of tax (previous year Rs. 13.50
(270%) per share and a special dividend of Rs. 0.50 (10%) per share of face value Rs.5.00 each
which absorbed an amount of Rs. 963.01 crore inclusive of tax) and will be paid to those
shareholders whose names stand registered in the books of the company as on the book closure
date.

11 | P a g e
ii) F2016 - M&M Standalone results
The Gross Revenues and other income of the Company for the year ended 31st March 2016
is Rs. 44461 crores as against Rs. 41481 crores in the previous year. The Net Profit after tax
before exceptional items for the current year is Rs. 3099 crores as against Rs. 2985 crore in
the previous year. The Net Profit after tax after exceptional items for the current year is Rs.
3167 crores as against Rs. 3321 crores in the previous year.
The Board of Directors has recommended a dividend of Rs. 12.00 (240%) per share of face
value Rs. 5.00 which will absorb a sum of Rs. 841.68 crore inclusive of tax (previous year Rs.
12 (240%) per share of face value Rs.5.00 each which absorbed an amount of Rs. 846.95 crore
inclusive of tax) and will be paid to those shareholders whose names stand registered in the
books of the company as on the book closure date.

12 | P a g e
Part B
Industry Analysis for any one of the company's Business (for any one Industry served )
and Industry attractiveness: -
Threat from new entrant: -
➢ High and unfavourable.
➢ Govt. has approved 100% FDI & minimum capital investment for new Entrant has been
removed.

13 | P a g e
Threats from buyers: -
➢ Low & favourable
➢ Getting SUV at such a affordable price.
Threat from supplier: -
➢ High & unfavourable.
➢ Car is manufactured through global alliance of companies each company handling
different sets of areas.
Threat from substitution: -
➢ Moderate/ moderately favourable.
➢ Presence of MUVs, SUVs are easily available to the customers.
Threats from competitors: -
➢ Low & favourable.
➢ No presence of SUV at this price.
Industry attractiveness: High
Company's Strategies (Differentiation/Cost Leadership / Focus) for achieving
competitive advantage for a particular Business (SBU) in that Industry: -
Focus: -
➢ Mahindra maintains its leadership in small commercial vehicle segment. According to
the industry experts, the company that focused on new product launches at a
competitive price has been received well in the market. It also helped the company to
attain the leadership position in the goods carrier segment. Currently, Mahindra sells
six products under the 3.5-tonne category – Imperio, Bolero Pik-Up, Bolero Maxitruck
Plus, Supro Maxitruck, Maxximo Plus, Jeeto. Out of which Bolero Pik-Up is the hot
seller among all the products of Mahindra.
➢ Apart from the new product launch and pricing strategy, the company believes that the
overall 360-degree approach towards the segment has worked. The company has taken
different initiatives on both CSR and business fronts such as UDAY and SmartShift.

14 | P a g e
Differentiation: -
➢ DigiSense is a cutting-edge technology that enables farmers to stay connected to their
tractors anytime, anywhere through a simple touch of a smartphone. DigiSense
empowers farmers to track the location of their tractor, receive alerts in case of tractor
abuse and monitor health of the tractor through regular reports, enabling them to
improve performance, productivity and profitability.
➢ Mahindra Blazo launched with Fuel smart switches in tanker application.

15 | P a g e
Company's Strategies to counter: -
1. Imitation: -
a. By innovating new products and services. New products not only bring new
customers to the fold but also give old customer a reason to buy Mahindra &
Mahindra Company’s products.
b. By building economies of scale so that it can lower the fixed cost per unit.
c. Building capacities and spending money on research and development. New
entrants are less likely to enter a dynamic industry where the established players
such as The Mahindra & Mahindra Company keep defining the standards
regularly. It significantly reduces the window of extraordinary profits for the
new firms thus discourage new players in the industry.
d. By changing focus
2. Substitution: -
a. By understanding the core need of the customer rather than what the customer
is buying.
b. By increasing the switching cost for the customers.
3. Hold up: -
a. By integrating
b. By building mutual dependence with suppliers
c. By developing trust with suppliers and customers
4. Slack: -
a. By monitoring behaviour of employees
b. By offering performance incentives
c. By shaping norms
d. By mobilizing for change

16 | P a g e
Part C
Choose any one competitor from the company's strategic group and conduct Relative
SWOT analysis of the company and the competitor at corporate and SBU levels: -
RELATIVE SWOT OF MAHINDRA & MAHINDRA VS TATA MOTORS
1) Strength: -
SWOT
Analysis Mahinda & Mahindra TATA Motors
Strengths
1. Mahindra has been one of
the strongest brands in the
Indian automobile market
1. Tata Motors is one of the most
established company in
automobile sector in India
2. Mahindra group give
employment to over 110,000
employees
2. Tata Motors has a wide &
extensive distribution and service
network
3. Excellent branding and
advertising, and low after
sales service cost
3. Good market penetration in the
taxi & rental segment
4. Sturdy SUV’s good for
Indian roads and off-road
terrain
4. Expert service professionals
available
5. Many associations like Jaguar
Land Rover, Hispanso, Macropolo
etc increases Tata Motors'
international presence
6. Dedicated engineering and
R&D department
7. More than 70,000 employees
are present with Tata Motors
8. Highly diversified product
portfolio
9. Strong brand legacy owing to
parent brand Tata

17 | P a g e
2) Weakness: -
SWOT
Analysis
Mahinda &
Mahindra TATA Motors
Weakness
1. Mahindra’s
partnership with
Renault did not
live up to
international
quality standards
through their brand
Logan
1. Limited international
presence as compared to
international car
manufacturers
2. Controversies like Singur
plant for Nano etc hurt Tata
Motors
3) Opportunities: -
SWOT
Analysis
Mahinda &
Opportunities
1. Developing
hybrid cars and
fuel-efficient cars
for the future
1. Expanding automobile market can be a
boon for Tata Motors
2.Tapping
emerging markets
across the world
and building a
global brand
2. Increasing per capita income and
purchasing capability of potential
customer base
3.Fast growing
automobile market
3. Leveraging customer engagement
experience to acquire new customers can
be done by Tata Motors
4.Growing in the
market through
electric car Reva
(controlling stake)
and entry into two-
wheeler segments
4. Leveraging mergers and acquisitions to
acquire newer technology
5. Tata Motors can boost business by
augmenting the distribution and service
network in various countries

18 | P a g e
4) Threats: -
SWOT
Analysis
Mahinda &
Threats
1. Government
policies for the
automobile sector
across the world
1. Increasing fuel costs
2. Ever increasing
fuel prices
2. Competition from other big automobile
giants means reduced market share for Tata
Motors
3. Intense
competition from
global automobile
brands
3. Competitive products offering same level
features at a lesser price
4. Substitute
modes of public
transport like
buses, metro trains
etc
4. Product innovations and frugal engineering
by competitors

19 | P a g e
Part D
Analyse the company's Balance Sheets & Income Statements over the last 5 years and
critically comment on the company's overall financial performance trends: -
1) Financials: -
Financials
* Results Consolidated
No. of
Months
Year Ending
12
Mar-14*
12
Mar-15*
12
Mar-16*
12
Mar-17*
12
Mar-18*
EQUITY SHARE DATA
High Rs 1,054 1,421 1,381 1,509 1,571
Low Rs 742 965 1,092 1,142 700
Avg P/E ratio x 11.4 20.5 18.8 17.7 17.7
P/CF ratio (eoy) x 7.8 12.2 11.2 10.5 12.6
Price / Book Value ratio x 2.3 2.7 2.5 2.4 3.8
Dividend payout % 17.7 20.6 18.3 17.4 11.7
Avg Mkt Cap Rs 529,960 643,614 668,645 718,021 1,411,891
No. of employees `000 19.4 19.8 20.1 20.4 20.9
Total wages/salary Rs 68,859 72,025 76,894 89,106 100,046
Avg. sales/employee Rs 38,091.8 36,019.4 37,690.8 41,133.8 44,133.8
Avg. wages/employee Rs 3,544.5 3,631.0 3,821.4 4,375.2 4,794.5
Avg. net profit/employee Rs 2,402.3 1,581.7 1,766.5 1,988.9 3,813.6
2) Income Statement: -
INCOME DATA
No. of
Months
Year Ending
12
Mar-14*
12
Mar-15*
12
Mar-16*
12
Mar-17*
12
Mar-18*
Net Sales Rs m 740,009 714,480 758,414 837,731 920,940
Other income Rs m 5,051 5,250 5,211 7,301 6,310
Total revenues Rs m 745,060 719,730 763,625 845,032 927,250
Gross profit Rs m 101,202 87,933 100,824 107,348 132,261
Depreciation Rs m 21,696 21,238 24,417 28,127 32,799
Interest Rs m 29,539 31,567 33,676 36,485 39,871
Profit before tax Rs m 55,018 40,378 47,943 50,038 65,901
Minority Interest Rs m -4,869 -2,439 0 0 0
Prior Period Items Rs m 8,304 7,887 8,460 8,994 11,073
Extraordinary Inc (Exp) Rs m 3,179 2,749 318 4,471 26,281
Tax Rs m 14,962 17,200 21,175 22,997 23,677
Profit after tax Rs m 46,669 31,375 35,545 40,505 79,578

20 | P a g e
3) Cash Flow: -
CASH FLOW
No. of
Months
Year Ending
12
Mar-14*
12
Mar-15*
12
Mar-16*
12
Mar-17*
12
Mar-18*
From Operations Rs m -2,437 10,549 23,848 1,831 6,819
From Investments Rs m -44,897 -41,649 -57,985 -58,754 -54,679
From Financial Activity Rs m 55,774 16,694 29,668 61,080 63,145
Net Cashflow Rs m 8,100 -16,332 -1,544 4,158 15,291
• Results Consolidated Source: Company Annual Reports, Regulatory Filings, Equitymaster
Inferences from the above obtained statistics Mar-14 to Mar-18*: -
➢ Increase in equity Increased Paid in capital
➢ Increased Net Sales (FY 2008-2017)
Gross profit margin % 13.7 12.3 13.3 12.8 14.4
Effective tax rate % 27.2 42.6 44.2 46.0 35.9
Net profit margin % 6.3 4.4 4.7 4.8 8.6

21 | P a g e
➢ Increased profit after taxes
There has been a sudden rise in PAT (Profit after Tax) for FY 2018 wr.t. FY 2017.
= 96.46 % increase
➢ Increased market cap
Avg Mkt Cap Rs 529,960 643,614 668,645 718,021 1,411,891
% change = 96.63% increase
➢ Increased total revenue
➢ Increased gross profit margin
No. of
Months
Year Ending
12
Mar-14*
12
Mar-15*
12
Mar-16*
12
Mar-17*
12
Mar-18*
Profit after tax Rs m 46,669 31,375 35,545 40,505 79,578
No. of
Months
Year Ending
12
Mar-14*
12
Mar-15*
12
Mar-16*
12
Mar-17*
12
Mar-18*
No. of
Months
Year Ending
12
Mar-14*
12
Mar-15*
12
Mar-16*
12
Mar-17*
12
Mar-18*
Total revenues Rs m 745,060 719,730 763,625 845,032 927,250
No. of
Months
Year Ending
12
Mar-14*
12
Mar-15*
12
Mar-16*
12
Mar-17*
12
Mar-18*
Gross profit margin % 13.7 12.3 13.3 12.8 14.4

22 | P a g e
➢ Decreased dividend payout
Dividend payout % 17.7 20.6 18.3 17.4 11.7
% change = 32.75% decrease
Stockholder equity is a key figure on the balance, as it represents the difference between the
value of the assets of a company and the value of its liabilities. As companies grow over time,
their stockholder equity will often rise, but it's important to understand exactly what contributes
to an increase in stockholder equity. Below, we'll look at the two main reasons that stockholder
equity can rise.
The best reason: retained earnings
From an investor's perspective, the most encouraging sign of business success is that it earns a
profit. However, not all profitable companies have their stockholder equity go up. What a
company chooses to do with its profits will determine whether stockholder equity will rise.
If a company chooses to hold onto its profits and either hold them as cash or use them to invest
internally in its business, then stockholder equity will go up. That's because the earnings of the
business will cause the value of cash or other assets to rise without any corresponding increase
in the company's liabilities. The company's Retained Earnings line item will rise on its balance
sheet, and that figure directly feeds into overall stockholder equity.
By contrast, if a company pays out all of its profits to shareholders as dividends, then
stockholder equity won't change. The rise in cash from the company's earnings will be offset
by the use of that cash to pay dividends, and there will be no net change in retained earnings.
The other reason: raising capital
The other situation in which stockholder equity goes up is when a company obtains additional
equity financing by selling stock. The sale of shares increases the amount of cash that the
company has, but it doesn't create a new liability. Instead, the proceeds from the stock sale are
typically split between the Common Stock line item and the Additional Paid-In Capital on
Common Stock line item, according to how much of the proceeds are allocable to the par value
of the newly issued shares versus any excess over par value.
No. of
Months
Year Ending
12
Mar-14*
12
Mar-15*
12
Mar-16*
12
Mar-17*
12
Mar-18*

23 | P a g e
Part E
Diagnostic Analysis & Strategic Recommendations
Identify the company's strategic challenges today at the corporate and SBU levels and
indicate your strategic recommendations to overcome these challenges, with your
rationale: -
Mahindra’s last big success was not an all-new vehicle, but instead was the re-skinned Scorpio
SUV. The Indian automaker, known best for its range of utility vehicles, is under attack. A
slew of compact SUVs will make a foray into India and will gun straight for the jugulars of
Mahindra’s best sellers such as the Scorpio and the XUV500. Apart from the Bolero MUV,
which isn’t likely to see any major new competition, the rest of Mahindra’s UV range needs
critical care to sustain the volumes amid rising competition. Here’s a wrap on the five
challenges that Mahindra will soon have to face.
1) Solving Mahindra & Mahindra logistics network optimization challenge with data
& analytics
Data and analytics is coming handy to solve some of the toughest challenges in supply chain
management. Analytics India Magazine caught up with Mahindra & Mahindra (M&M) to
discuss how the world’s largest tractor maker is putting the network optimization in the fast
lane in the post-GST era with data and analytics.
“Mahindra and Mahindra incubated an internal advanced analytics (Information Insights
Center-IIC) team at the beginning of 2016 to focus on advanced analytics solutions and to
provide insights across various business functions. IIC worked on the GST logistics network
optimization project with logistics experts from Automotive and Tractor business units to build
the advanced analytics framework”
2) Electric vehicles not taking off, but hybrids aren’t on the horizon yet
Mahindra showed the XUV500 Diesel Hybrid concept way back in early 2014, at the Auto
Expo of that year. However, a production version of this concept is yet to materialize.
Electric cars, subsidies notwithstanding, aren’t working for Mahindra & Mahindra, but
hybrids could be the next big thing.

24 | P a g e
Maruti Suzuki is keen on building India’s most fuel-efficient car – the 48.2 Kmpl Swift Hybrid.
Tata Motors is also said to be working on hybrid cars. Amid all this, Mahindra will stand to
lose its first mover advantage if it doesn’t bring forward hybrid versions of its cars. Only pure
electric will not do.
3) Where are the Ssangyongs?
Mahindra’s range of SUvs such as the Scorpio and XUV500 are quite rugged but not as refined
as say a Ford Ecosport or a Renault Duster. The arrival of the Hyundai Creta and the Maruti
Suzuki S-Cross may further put pressure on the Scorpio and the XUV500.
Mahindra does have a bunch of refined SUVs that can take on the likes of the Ford Ecosport
and the Hyundai Creta. One is the Ssangyong Tivoli and the other is the Korando. However,
the automaker hasn’t yet announced the new Ssangyongs for India. This delay could hurt the
company until it takes the premium route in the compact SUV space.

25 | P a g e
REFERENCES
1) https://en.wikipedia.org/wiki/Mahindra_%26_Mahindra
2) http://www.mahindra.com/annualreviewFY17/performance-business-performance.jsp
3) http://mahindragears.com/about-us/mission-and-vision.html
4) https://economictimes.indiatimes.com/industry/auto/cars-uvs/will-mahindra-
mahindra-rise-again-to-occupy-its-lost-space-in-the-passenger-vehicles-
market/articleshow/63724114.cms
5) http://www.mahindra.com/news-room/press-release/1345633055
6) https://simconblog.wordpress.com/2015/07/04/automobile-industry-analysis/
7) https://www.slideshare.net/guestf5bad7/mahindra-mahindra?next_slideshow=1
8) https://www.cartoq.com/5-big-challenges-for-mahindra-mahindra-and-how-the-
automaker-plans-to-rise/
9) https://analyticsindiamag.com/mahindra-mahindra-solving-logistics-network-
optimization-challenge-data-analytics/

Mahindra & Mahindra

More Related Content

What's hot (20)

Similar to Mahindra & Mahindra (20)

Recently uploaded (20)

Mahindra & Mahindra