M&M plans a base on foreign shores to step up global play

Auto major Mahindra & Mahindra (M&M) is planning to set up a second base, outside India, to make its portfolio more globalised.

The focus on setting up a base on foreign shore emanates from the fact that the M&M is aspiring to be a global player backed by the investments it has done in several countries in farm machinery and auto sector.

"There is a need for us to have a second base, outside of India, and we are working on it. But we can't talk beyond it at this point of time," said a senior management official during an informal interaction with media on Wednesday.

As a part of its globalisation plan, M&M is also focusing on merger and acquisition (M&A) in companies which can be beneficial in reaching their desired goals, said Pawan Goenka, managing director of M&M. Increasing manufacturing footprint, research & development (R&D), enhancing branding and sales infrastructure are other important focus points, he added.

According to Rajesh Jejurikar, president and chief executive, farm equipment & two-wheelers, M&M, the company is already the number one in tractor manufacturing in the world in terms of volumes.

The company already has a presence in many countries including US, Finland, Algeria, Nigeria, Kenya, South Africa, China, Japan and Australia.

Talking about the company's global aspiration, Jejurikar through a presentation explained that in FY2015, the geography mix of the company's farm machinery products stood at around 30%, which increased to 37% during FY2017. It is projected to increase to 50% by FY19.

Talking about further synergies among its companies, Goenka said that both M&M and China's SsangYong, in which it owns 70% stake, are working together to design engine on a common platform. Both the companies will develop their own product around it, which is expected to get launched by the middle of 2018.

M&M had acquired around 70% stake in SsangYong Motors in 2011 at an investment of around $450 million. The reports said that common synergy is expected to save both the companies about $70 million over a period of about five years.

In another parallel development, Goenka did not refute the reports about Ford planning to collaborate with M&M in certain aspects of business. When asked to comment on it, Goenka said, "I will not either confirm or deny the report. It is very common for any auto company to be in talks with 4-5 others for a possible collaboration or partnership. The chances of such talks fructifying remain one out of 4-5 times."