Company

LOGO Farm Mechanization Sector:

Company analysis: Mahindra and
Mahindra Limited

Presented By
Pankaj K Bhaisare
 Contents
1
3 Introduction of Mahindra Group

2 Tractor industry in India

3 Mahindra and Mahindra Farm equipment division

4
3 Vision, Mission and core Values

5 SWOT analysis, Five forces analysis

6 Value proposition and Value chain in India

Introduction of Mahindra Group

 Large industrial conglomerate in India

 The company was set up in 1945 in Ludhiana as Mahindra & Mohammed.

 Founders: brothers K.C. Mahindra and J.C. Mahindra along with Malik
Ghulam Mohammed.

 US $15.9 billion multinational group with more than 155,000 employees

in over 100 countries across the globe.

 Leadership in utility vehicles & tractors in Indian market

 On April 2012, top 5 companies in group are Mahindra and Mahindra ltd.
( $ 8.41 billion), Mahindra Satyam ( $ 1.86 billion), Tech Mahindra ltd. ( $1.81
billion), Mahindra and Mahindra Financial Services ltd ( $1.40 billion) and
Mahindra holidays Resorts India ltd. ( $ 0.49 billion)

 Diversified operation span in 18 key industries in 10 sectors.

 Group Diversification
Automotive and Farm Sector Financial Service Sector
 Automotive  Financial services
 Farm equipments Insurance Broking
 Agri –business  Rural Housing Finance
 Energy
 Construction equipment
Systech Sector
 Aerospace Components
Information technology
 Steel Consulting
Sector
 IT

Mahindra Partners
 Steel
 Retail Two wheeler Sector
 Industrial equipment  Two wheelers
 Logistics
 leisure boats
 Solar energy
Aftermarket Sector
Infrastructure and  Used car purchase and
reality Sector sales service
 Infrastructure
Real estate

Hospitality Sector Defense Sector

 Hospitality  Defense
Vision and Mission Statement and some
financials of Mahindra Group
VISION:
“To create a fully collaborative environment in which suppliers can deliver
exactly what the company needs, when it needs it, and at a competitive cost.”

MISSION:

“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.”
Financials of Group:
 Indian Tractor Industry

 In financial year 2012, Indian tractor market recorded sales of 5,35,210

tractors compared to 4,80,377 tractors in previous year , recording a growth
of 11.4%
 India’s current tractor penetration is estimated at ~20 tractors per 1000
hectares of agricultural land.

Fig: Trends in yearly tractors sales volume ( domestic +

Export)
Mahindra and Mahindra Limited

 Among the top three tractor brands in the world

Sales 200000 tractors annually. They sold 1.75 million tractors worldwide.

 The first tractor company globally to win the Deming Application Prize in 2003

 The first tractor company worldwide to win the Japan Quality Medal in 2007

It is ranked 21 in the list of top companies of India in Fortune India 500 in 2011

 Business model: Wholly owned, joint venture and franchise

 Value proposition: high quality, focus on customer, individual dignity,

transparency and trust.
Cont’d…

 Operation: operates in 40 countries in 6 continents.

 It manufactured tractors and farm equipments at four plants in India, two in

China, three in the United States, and one in Australia.

 It has three major subsidiaries: Mahindra USA, Mahindra (China) Tractor

Company, and Mahindra Yueda (Yancheng) Tractor Company (a joint venture
with the Jiangsu Yueda Group).

 Supplier to dealer whole process is integrated with IT, use of MIS, ERP, pull-
based production and Supply system, timely procurement of raw material,
selection of dealers and employees management.

 Distribution: local dealers

 Cont’d…

 Products :

Tractors
 Tractors ranging from the 15 HP engine to 85 HP.
 Sales under name Arjun, Bhoomiputra, Sarpanch, Shaan, Yuvraj and
Swaraj series for Indian Market.
 FengShou series for China Market
 Huanghai Jinma tractors series for Europe and USA.

Farming Implements:
A) Crop Harvesting Solutions : self-propelled wheel harvester and
Crawler paddy harvester .
B) Rice Planter
C) Cane Thumper and Detrasher for Sugarcane

region specific product for Australia and US.

Cont’d…

 Promotion:

a) Advertisement on TV, newspaper, magazine and radio.

b) Promotion campaign near public place like temple, market place.

c) Field demonstration d) Providing financial assistant in collaboration with

banks and co-operatives
 Pricing: largely for medium and large farm land holder but new they target small
farmers also. Low price as compared to competitors.
 Positioning: business leaders, innovative, global potential, financial returns

 CSR: Employee Social Options (ESOPs) volunteers create health, education and
environment awareness. Sponsoring sports and cultural events.
 Competitors: TAFE, Eicher, Escort, JD, Sonalika, HMT, Others
Mahindra and Mahindra Limited:

 The net revenue

coming from farm
equipment division is
36.6 % i.e. 13615
crore ( $3.37 billion)
Mahindra and Mahindra Ltd. In India

 No. 1 tractor brand in India, Polity:

since 1983, with a domestic  Government laid stress on the
market share of around 42% mechanization of agriculture with a view
to boost food grain production.
Economy:
 Agriculture base economy. Subsidy on agricultural loans from
government
 India has 62 % marginal farmers,
 Change in taxation policy
19 % small, 18 % medium and 1 %
large farmers.
 100% FDI policy
 Growth in farm mechanization
due to labor scarcity.
Demography
 Credit availability: 95% of tractor Diversity in land holding and cropping
sales are on credit. pattern.
 Regional variation in farm
 higher national income growth mechanization practices.
may boost demand for a firm's
products
Vision, Mission and goals of Mahindra and
Mahindra farm equipment division
Vision:
“To be the undisputed leader of world automobile and farming equipment
industry.”

“ Farm - Tech Prosperity”

Mission:
“To provide best value for money to customers through best quality and
most cost effective products and services.”

Goals:

 To provide highly technological innovative product

 By 2015 it wants to enter almost all continents of world
 to make the production system even more efficient
 To usher prosperity; for its customers, dealers, employees, society and all
other stakeholders.
 SWOT
Strength Opportunities
 one among top three player Growing economy and improved farm practices
Strong brand name with market share of 42 %  Increase in farm mechanization due to labor
in Indian tractor business. scarcity.
 Strong relationship with dealers  Emerging market because only large and
 Strong supply chain with new technologies. medium farmers use farm machinery. Huge
 Product development ability. market potential. penetration of tractors is 20
The parent company has its own Infrastructure tractors per 1000 hectares of cropped area
Company, IT Company and Financial service  Increase in credit availability
company.  Technological innovation
 Huge distribution channel in rural, urban and  Government support for farm mechanization
semi urban area  High export potential due to low cost of
 huge product range and strong R&D . The manufacturing. ( exported 13722 tractors)
team of >600 engineer pushes technology
forward.
 High investment capacity
 Diversified business

Weaknesses Threat
The company is highly dependent on the rural Dependency on rural segment and monsoon
sector  Farm land fragmentation
Less technological ability as compared to  Entry of foreign players
Foreign players  Increase in diesel prices reduce tractors sales
Low labor productivity  Development of technically superior new mode
 Government policies (Subsidy)
 Competitiveness- Five forces analysis
Bargaining power of Buyers:
 The consumer base of tractor is highly disbursed throughout
India.
 Due to High switching cost tractors companies can compromise
on quality and price
 Lack of awareness among farmers like pricing, offerings. Etc
 there are a few, big buyers so each one is very important to the
Threat of New firm Threat of Substitute:
entrants:  Hence buyers power is high.  The firms major
High investment product is tractor.
and economy of  very less
scale by mergers Rivalry : substitute for
and acquisitions.  Existing competitors TAFE, Eicher, Escort, JD, tractors likes bulls
 Highly Sonalika, HMT, Others and power tillers but
integrated dealers Unconcentrated and competition is more. have very low
network. It restrict  competition on cost and quality. performance.
the entry. Economy of scale and continuous technological  The tractors
 Hence threat innovation create entry barriers. produced by
from new entrant competitors have
is less. high price.
Hence less threat
Bargaining power of Supplier: of substitute
Though steel forms a major inputs , the farm equipment
industry is not most important customer for steel industry.
 Many number of supplier are there for tractor industry
 Switching cost from one supplier to another is less
 Hence supplier power is less.
 Value Proposition in India

QCIT: Quality (Standard), Customer (focus) , Individual dignity (employee), transparency and trust
(employee and customer).
 USP – Ruggedness and performance.
 Value –
 Good Corporate Citizenship
 Seek long term success, in alignment with the country's needs, without compromising
ethical business standards
 Professionalism
 Seek the best people for the job and giving them the freedom and the opportunity to
grow
 Support innovation and well reasoned risk taking, but will demand performance
 Customer First
 Respond to the changing needs and expectations of the customers speedily,
courteously and effectively
 Quality Focus
 Make quality a driving value in the work, in the products and in the interactions with
others
 Believe that the quality is the key to delivering value for money to the customers
 Dignity of the Individual
 Value individual dignity, uphold the right to express disagreement and respect the time
and efforts of others
 Nurture fairness, trust and transparency through actions.
These values become the compass that will guide both personal and corporate actions of
Strategy
 Diversification of business as well as products: Automobiles and Farm
equipments. Different agricultural services in input, finance and IT also
provided by subsidiary of parent company.
 Place: Production plant operate in India, China and USA. In India target rural
farming population.
 Distribution network: Distribute product through local dealer network.
 Products: Different series of tractor with different names ranging from the 15
HP engine to 85 HP. Rice planter, Sugarcane thumper and detrasher.
 Price: low as compared to other competitor due to economy of scale.
 Promotion: Through TV, Newspaper and magazine advertisement, sponsor
local events and sports, arrange promotion campaign and field
demonstration.

 Technology: Production, Forecasting, account management (ERP), Data

management (MIS), Orders fulfillment.

 Management: Skilled employed own hired, Joint venture.

 Mahindra and Mahindra value chain:
Firms infrastructure: Owned manufacturing plant in India and Joint venture for manufacturing in foreign countries.
High investor equity fund.
Human Resource Management: Recruit skilled people from reputed institute. Trained them and provide
appropriate compensation according to their work.
Technology development: New innovative product design, Use of MIS, ERP, monthly forecasting.
Procurement: Procurement of raw material from identified suppliers by making contracts, Advance machinery
imported form foreign countries.
Inbound logistics Operations Outbound logistics Marketing and sales: After sales
 Identified suppliers  Production plant : the  It deliver tractor  Product : - services:
 economy of scale Area-wise, model-wise, from manufacturing affordable tractor and  Mahindra
purchase week-wise sales plat to companies farm equipments. service
 Suppliers agreement forecasts SKU and dealers -Standard design of stations
( one subsidiary of parent  Total quality SKU on the basis tractors and farm provide
company also supplier) management system of demand. equipments. maintenanc
 Just in time order and monitored by skilled  Information  Price: Tractor : e services
delivery. Use Supplier engineers. system for tracking according to power Informatio
Kanban system.  ERP use for order order information. 15 Hp to 85 Hp. Farm n about
 Maintain some and inventory  Keeping finished equipment: low tools and
inventory. management. good inventory compared to farm
 Road Transport use  MIS use for collecting record. competitor. equipment
trucks. data and forecasting  Give information  Place: local dealer  Register
 A GSM based tracking demand. to plan showrooms complaints.
system was  According to demand manufacturing  promotion:
Implemented to track the assemble the tractor process to through add and
trucks. part and deliver. manufacturing plant campaign.
Core competence

Quality: Transparency and trust:

Product development  They expand the business without compromising ethical
according to standard business standards.
 Transparency in transactions with suppliers and
Total quality management
customers
system to ensure quality. Develop trust among customer by providing standard
product and affordable price.
Customer focus:
 Design products according
to customer need through Sources of sustainable competitive advantages:
consultation and feedback. Operations:
 Response to changing  Economy of scale in operation helps to reduce cost.
need and exception of  Total quality management system
 Use of Kanban to manage suppliers.
customer speedily.
 Integration of supply chain with IT i.e. ERP, MIS to
manage and communicate. Use GSM for tracing material
Individual dignity: delivery.
 Respect the time and Firm Infrastructure:
efforts of all employees and  Strong financial resources
treat all employees same.  Technology innovations
It helps to retain employees.  Brand image
Recommendation
 Marketing Recommendations:
 Focus on 41-50 hp segment tractors with new improved design which can
work in hard field.
 Develop in-house credit lending facility (lending through parent
companies subsidiary at low interest rate on time with easy procedure.

 Focus on Channels
 Ensure higher distributor margins and increase distribution network
 Implement custom hiring model: Mahindra tractors can be made
available on lease in partnership with government agencies as sugar mill
co-operative societies. Government partnership would impart a stamp of
reliability on Mahindra tractors and at the same time, provide -platform for
the farmers.
 Expand geographically
 Diversify Tractors - Monsoons correlation: Tractor sales, as already seen,
are driven by monsoons. A bad 3-months monsoon season generally
translates into large inventories. Geographical expansion would help
diversify tractors sales ± monsoon correlation, thus bringing down
inventories to free up locked-up capital.
Conclusion

India is growing economy. Farm Mechanization in India is

still in its early stages. The company Mahindra and Mahindra having
more opportunities to grow due to high investment capacity, Huge
market capture and strong brand name. The competition from rivals
is more, low threat of new entrant, less bargaining power of supplier
and high bargaining power of buyer restrict the growth but
operational competitive advantages and core competence helps to
achieve the goals of company leads near mission and vision of
company.
Company
LOGO