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PROJECT REPORT FOR

MODULE 250

[MANAGING ENVIRONMENTAL INTERFACES]

ON

MAHINDRA & MAHINDRA GROUP


DATE OF SUBMISSION: FEB 9TH 2010

Submitted to: Facilitators, M250


Prof. Sanjay Kumar,
Dr. Ashutosh P. Bhupatkar, &
Prof. Ashok Sanghi

Prepared & Submitted by: Puneet Kumar, MBA-II Year


Pearl School of Business

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TABLE OF CONTENTS

ACKNOWLEDGEMENT ................................ ................................ ............... 2

EXECUTIVE SUMMARY ................................ ................................ ............... 3


Founders ................................ ................................ ................................ ..... 4

ORIGIN OF THE COMPANY ................................ ................................ ......... 5


Evolving to become an automobile manufacturer ................................ ......... 6
Invention of the ǮJeepǯ ................................ ................................ ............... 6
Jeep Ȃ Indian Connection ................................ ................................ ............. 7

INDIAN INDUSTRIAL ENVIRONMENT (Post 1947) ................................ ........ 8


Industrial Policy Resolution ................................ ................................ ....... 8
License Raj (Second Phase for development of Mahindra Empire)............... 8
Post License Raj (Third Phase) ................................ ................................ ... 8

M&M TODAY ................................ ................................ ............................ 10


BIBLOGRAPHYǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥ.13

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ACKNOWLEDGEMENT

I would like to share immense gratitude towards my facilitators of this module


for their support and cooperation for the completion of this report.

I want to thank the module coordinator Prof. Sanjay Kumar for designing the
module contents as well as for being the facilitator for one of the course.

I also want to thank Prof. Ashutosh P. Bhupatkar, for his support towards
learning the history of Indian business and helping us understand the
consequences and effects of the British era on our business society. This also
has helped me to understand my subject company, Mahindra and Mahindra,
its history, the challenges and how they came out from those challenges.

Last but the least, I would like to thank Prof. Ashok Sanghi, for making us
understand the vitality of learning current business interfaces for young
professionals like me who are dreaming of becoming future entrepreneurs.

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EXECUTIVE SUMMARY

This study report is based upon my study and preparation for the course
module M250, namely ǮManaging Environment Interfaceǯ. This module
focuses upon the external environment surrounding Indian business which
covers the government, society, culture and history.

This report is made taking ǮMahindra and Mahindraǯ group as point of study
for the above stated topics. The company took birth just before Indian
independence therefore it has been deeply impacted by the transformation
the Indian industrial environment has taken after independence.

The development of Mahindra and Mahindra has been described in three


phases:

• First phase (from birth to pre ǮLicense Rajǯ era)


• Second phase (the ǮLicense Rajǯ)
• Third phase (Post ǮLicense Rajǯ till today)

The post license Raj period has been a boom for M&M. Despite challenges
from inside and outside environment, M&M has overcome its weakness and
leveraged its competency with innovation in its business processes. Now we
can see M&M as one of the top 10 business houses in India and among top 200
in the world.

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Founders
Mr. J.C. & K.C. Mahindra, the founders of the Mahindra Group, had the same ambition: to
prove to themselves and the world that Indians were capable of being the best at whatever
they chose to do. Accordingly, they gave up their professional careers at TISCO and Martin
Burn respectively, and risked becoming entrepreneurs by setting up their own company:
Mahindra & Mahindra.

It was under their inspiring leadership that Mahindra & Mahindra made the first indigenous
Jeep in the country in 1949. Their innovative spirit also showed during the days when the
Company was the leading importer of steel in the country. J.C. & K.C. Mahindra had to
persuade the Indian Government to buy French rails for the fledgling Indian Railways
because they felt that the British specifications were obsolete and not the best suited. To
convince government officials of the superiority of the French product, they laid down a
short length of rail line with French rails and invited the government authorities for a ride.
During the journey, chilled champagne was served in glasses filled to the brim. Legend has
it that the train raced along, but not a single drop of champagne was spilled, so smooth
were the French rails. Needless to say, they made their point.

Interestingly, J.C. & K.C. Mahindra believed in globalization decades before it had become a
buzzword. Even in the fifties, the Company had British and German engineers on its rolls,
and international tie-ups with Mitsubishi, Willys, Perrine and Chrysler. Every venture they
set up delivered satisfactory financial results and their company, Mahindra & Mahindra, has
grown into one of India's largest corporate groups. Even today the Group is driven by the
same vision that drove them then.

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ORIGIN OF THE COMPANY
The emergence of Mahindra was entirely a post war phenomenon. The scions of a
landholding Khatri family of Ludhiana in Punjab, Kailash Chandra Mahindra and his brother
Jagdish Chandra Mahindra, after completing their education, worked for some time with
two large steel houses. In 1930, however, they left the corporate world to join high
positions in the government. As war was coming close, they also started to think more
openly and decided t launch their own company which would be one of the helping hand to
develop the new India. They believed in the Nehruvian visionȄwith an infusion of
engineering education and technology, Indians could be second to none.

On October 2nd, 1945, with that vision in their mind, Mahindra brothers set up a company in
Ludhiana as Mahindra & Mohammed in partnership with a close friend Ghulam
Mohammed. Company was engaged in import of steel, although it also promoted and
acted as managing agents of Machinery Manufacturer Organization (MMC) registered in
Bombay in 1946. A large part of the share capital to MMC was provided by Rana of Nepal
with whom Mahindra brothers had established close contacts.

In August 1946, after getting independence from British rule, the wave of partition
disrupted the plans of brothers. Ghulam Muhammad migrated to Pakistan after breaking
up the partnership. Only two brothers held the ownership and the name of the company
changed to ǮMahindra and Mahindraǯ.

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Evolving to become an automobile manufacturer
Invention of the ǮJeepǯ
The first jeep prototype was built for the United States Army Quartermaster Corps (QMC)
by American Bantam in Butler, Pennsylvania, followed by two other competing prototypes
produced by the Ford Motor Company and Willys-Overland.

Production of the Willys MB began in 1941 with 359,851 units were produced before
production stopped at the conclusion of World War II. The origin of the name "Jeep" has
been debated for many years. Some people believe "Jeep" is a phonetic pronunciation of
the abbreviation GP, from "General Purpose", that was used as part of the official Army
nomenclature. The first documented use of the word "Jeep" was as the name of a character
in the Popeye cartoon, known for his supernatural abilities (e.g., to walk up walls). It was
also the name of a small tractor made by Modine before WW2.

Whatever the source, the name stuck and, after the war, Willys filed a trademark claim for
the name.

After war, Willys struggled to find a market for the unusual vehicle, and made an effort to
sell it as an alternative to the farm tractor. Tractors were in short supply having been out of
production during the war. Despite this, sales of the "agri-Jeep" never took off, mainly
because it was too light to provide adequate draft.

However, the CJ-2A was among the first vehicles of any kind to be equipped with four
wheel drive from the factory. It gained popularity among farmers, ranchers, hunters, and
others who needed a lightweight vehicle for use on unimproved roads and trails.

In 1946, a year after the introduction of the CJ-2A, Willys produced the Willys "Jeep" Utility
Wagon based on the same engine and transmission, with clear styling influence from the
CJ-2A Jeep. The next year came a "Jeep" Utility Truck with four wheel drive. In 1948, the
Wagon was available in four wheel drive, making it the ancestor of all Sport Utility Vehicles.

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Jeep Ȃ Indian Connection
The term Multi-Utility Vehicles owes its origin to the 'General Purpose vehicles' used by
American armies during the World War II. The Willyǯs Jeep was India's first Multi-Utility
Vehicle was launched by Mahindra and Mahindra in 1944 as a franchisee.

Mahindra brothers saw the opportunity at that time. Good infrastructure for transportation
was limited to only metros and majority of areas were served by Kutcha roads (makeshift,
somewhere made of sand, bricks and dust). This was a big challenge in front of government
as well as the industrialists to reach into smaller towns and cities. It was the invention
General Purpose Vehicles by Willys to be used by American Armies during World War II,
which gave the solution. These vehicles were also seen as alternative to farm tractors which
proved its efficiency. Multi-Utility Vehicles are now seen as ideal for the rural roads, and are
highly favored in hilly regions of the country where the terrains tend to be on the rougher
side.

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INDIAN INDUSTRIAL ENVIRONMENT (Post 1947)
After independence, there were many problems facing the Indian government. Poverty,
education and unemployment were result of poor and absence of systematic and
coordinated industrial growth and inequality in wealth distribution.

Industrial Policy Resolution


It was the first major step taken by the Indian government for setting directions for the
industrial development of the nation. Government adopted socialistic pattern of governing
and held control of the basic industries. Automobiles were treated as a luxury product and
therefore Mahindra and Mahindra business survived as one of the three automobile makers
in the country.

License Raj (Second Phase for development of Mahindra Empire)


This marks the period between 1960 and 1980 of the industrial development which was
governed by the Permit raj or commonly known License Raj. Government controls and
scarcity of economic development lead to death of innovation in Mahindra business.

The License Raj was a result of governmentǯs decision to have a planned economy where all
aspects of the economy are controlled by the state and licenses are given to a select few.
The main purpose of the policy was to make sure that industrial

For existing players, several restrictions were imposed like regulation of number of units to
be manufactured and price of selling. It also restricted companies to develop and expand.
Mahindra and Mahindra was changed dramatically due to enforcement of some of these
restrictions. For example, applications for licenses to make scooters and passenger cars
were all turned down following some regulatory objections raised by the government. In
another case, Mahindra & Mahindra like many Indian companies was forced to expand into
other businesses, which lead to the creation of a tractor division in 1982 and a tech division
(which is now Tech Mahindra) in 1986.

Post License Raj (Third Phase)


After the liberalization in 1991, India's overall automobile Industry grew in leaps and
bounds. With the growth in the Indian economy, big international car manufacturers like
General Motors, Ford, Toyota, Honda, Hyundai, Rolls Royce, Bentley and Maybach have
entered the Indian market.

Due to opening of the economy and entry of foreign companies, the early Ǯ90s was a period
of turmoil at M&M. Company ran into troubles due to international competition. The
company had to deal with more than one takeover attempt and a major recession and
violent labor unrest. Adding to the situation was the fact that the countryǯs auto sector was
opened up to global manufacturers. This looked as the decline of the industry as most

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expected that Indian companies would have to sell out or wind up. That was the
environment in which Anand Mahindra, a Harward graduate was appointed as deputy
managing director of M&M.

Under the leadership of Anand Mahindra, M&M kicked off the business process re-
engineering (BPR) initiative that sought to transform the entire companyȄfrom
manufacturing to marketing to research. Massive changes were initiated. Many of these did
not go down well with unions and led to major unrest. It was a make or break for the
company. But eventually, the BPR worked. Now, it is viewed as a watershed event.

A few years later, the BPR exercise led to a surprise outcomeȄthe Scorpio. BPR was
implemented in product development and a 13-seater new vehicle project was initiated. But
as the development team followed the new business processes and started talking to
customers, they stumbled upon the market need for a sports utility vehicle.

Another example of managerial innovation was Mahindra Finance. At a dealer meet, Bharat
Doshi, now the executive director finance and corporate affairs, felt the need for a lending
outfit for the company. His proposal to start a finance company was cleared. Mahindra
Finance, formed in 1991, is now a listed company with a market capitalization of around Rs
2,300 crore.

This shows that post liberalization, innovation into business activities started to happen at
M&M which is a very important strategic tool for success in international competitive
market. This has lead to the success of M&M even today.

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M&M TODAY
The US$ 6.3 billion Mahindra Group is among the top 10 industrial houses in India.
Mahindra & Mahindra is the only Indian company among the top three tractor
manufacturers in the world.. Mahindra is the market leader in multi-utility vehicles in India.
It made a milestone entry into the passenger car segment after having international
collaborations. Now M&M has made an entry in two wheeler segment after acquiring
Kinetic Engineering.

The Group has a leading presence in key sectors of the Indian economy, including the
financial services, trade and logistics, automotive components, information technology,
infrastructure development and After-Market.

With over 65 years of manufacturing experience, the Mahindra Group has built a strong
base in technology, engineering, marketing and distribution which are keys to its evolution
as a customer-centric organization. The Group has several state-of-the-art facilities in India
and overseas.

M&M has entered into partnerships with international companies like Renault SA, France,
and International Truck and Engine Corporation, USA. Forbes has ranked the Mahindra
Group in its Top 200 list of the World's Most Reputable Companies and in the Top 10 list of
Most Reputable Indian companies. Mahindra has recently been honored with the Bombay
Chamber Good Corporate Citizen Award for 2006-07.

Business of Mahindra Group


Automotive Sector

Mahindra Group is the market leader in utility vehicles in India since inception. Mahindra
also manufactures and markets utility vehicles and light commercial vehicles, including
three-wheelers. Some of the famous automobile brands of Mahindra are: Scorpio and
Bolero. Recently, Mahindra joined hands with French automobile major Renault to enter
passenger car segment. It has launched a car called Mahindra Renault Logan and Mahindra
Group's foray into the two-wheeler segment began with the acquisition of the business
assets of Kinetic Motor Company Ltd. (KMCL) extending Mahindra's heritage and pedigree
into the two wheeler space. The Two Wheeler Sector of Mahindra will design and market a
full range of scooters and motorcycles for the Indian market, establishing a robust and end-
to-end two-wheeler business in every segment of the industry. The company has a state-of-
the-art manufacturing facility at Pithampur, near Indore in Madhya Pradesh.

Its subsidiary companies engaged in automotive sectors are:

• Mahindra Renault Private Limited (MRPL)


• Mahindra Navistar Automotives Limited (MNAL)
• Mahindra Navistar Engines Private Limited (MNEPL)

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Farm Equipment Sector

Mahindra is the largest producer of tractors in India and is among the top five tractor
brands in the world. It has its own state-of-the-art plants in India, USA, China and Australia,
and capacity to produce 1,50,000 tractors a year.

• Mahindra Gujarat Tractor


• Mahindra Agribusiness
• Mahindra Powerol
• Mahindra USA
• Mahindra Australia
• Mahindra China Tractors

Trade & Financial Services

Mahindra Intertrade Limited and its subsidiaries have specialized domain knowledge in
imports and exports of commodities, domestic trading, marketing and distribution
services. Mahindra Finance is one of the largest Non Banking Finance Companies in India
with an asset base of about Rs. 5000 crores. Mahindra Insurance Brokers offer Life and
Non-life Insurance plans to retail and corporate customers. Mahindra Steel Service Centre
is the first steel service centre in the organised sector in India.

• Mahindra & Mahindra Financial Services Ltd (Mahindra Finance)


• Mahindra Insurance Brokers Ltd.
• Mahindra Rural Housing Finance Ltd (MRHFL)

Infrastructure Development

Mahindra Group has interests in real estate, special economic zones, hospitality industry,
infrastructure development, project engineering consultancy and design. Mahindra
Holidays & Resorts is the leader in the lifetime holiday market in India. Mahindra Gesco is
fastest growing Construction Company in India. Mahindra World City is developing and
promoting India's first Integrated Business City. Mahindra Acres Consulting Engineers is a
multidisciplinary engineering consultancy organization.

• Mahindra Holidays & Resorts


• Mahindra Lifespaces Developers Limited
• Mahindra World City
• Mahindra Infrastructure Developers
• Acres Consulting Engineers

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Information Technology

Mahindra Group entered into IT sector in 1986 when it formed a joint venture with British
Telecommunications plc. The company was called Mahindra-British Telecom. The
Company has recently changed its name to Tech Mahindra. Tech Mahindra is a leading
provider of telecommunication solution and service industry world-wide. It is India's 8th
largest software exporter.

• TechMahindra
• Bristlecone

Speciality Businesses

Mahindra Group companies such as Mahindra AshTech, Mahindra Defence, Spares


Business Unit and Mahindra Logistics are into Speciality Businesses. Mahindra AshTech
undertakes turnkey contract execution for Ash Slurry System and Travelling Water Screens.
Mahindra Defence Systems looks after the requirements of India's defence and security
forces. Mahindra Logistics provide complete logistics solutions to complex transportation
needs of clients across the world.

• Mumbai Mantra
• Mahindra Defence System

After Market Segment

The After-Market Sector focuses on the vast untapped potential in the after-market space
covering multi-brand pre-owned vehicles, servicing, spares and the financial instruments
and exchange platforms, which support this business ecosystem. This will create in the
Organized Sector a business ecosystem which mirrors the existing ecosystem for new
vehicles.

• Mahindra Spares Business


• Mahindra First Choice
• Mahindra First Choice Wheels Ltd.

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BIBLOGRAPHY
Sources of Information

Books:

• The Concise Oxford History of Indian Business, Dwijendra Tripathy and Jyoti Jumani, Oxford
University Press.

Internet:

• Company website:
o www.mahindra.com
• www.wikipedia.org
• www.business.outlookindia.com
• www.experiencefestival.com
• www.automobiles.mapsofindia.com

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