Mahindra & Mahindra (M&M)on Wednesday inaugurated a Rs 100-crore research and development (R&D) centre in Pune, its second and bolder attempt to take on competition in the two-wheeler industry. The company aims to be present in every segment of the industry, focusing on in-house R&D. From electric two-wheelers to micro hybrid scooters and diesel engines, the Mumbai-based company is working on various concepts. Vice-Chairman and Managing Director Anand Mahindra, in an interview with Swaraj Baggonkar, talks about his plans to make Mahindra 2 Wheelers a Rs 20,000-crore behemoth by 2020. Edited excerpts:
When M&M had acquired Kinetic, you had retailed the inherited models under your own brand. However, the focus has now shifted to in-house R&D. What is your strategy?
Acquisition of the models we got from the alliance of Kinetic and Sym was our entry point. I don’t think there is any doubt in our minds that in the long run, we are committed to this industry and would want make an impact. There was no alternative, but to have a very strong internal and organic R&D unit. This is how M&M has gone ahead in other sectors. So, we clearly understand how this becomes a game-changer. Since the time we developed the Scorpio to the launch of the XUV 500, strong R&D has become a pillar of Mahindra’s strategy.
Currently, there is cut-throat competition in the two-wheeler industry, with Hero MotoCorp at the top, and Honda fast catching up with Bajaj Auto. How do you see Mahindra making inroads in the tightly controlled market?
First, do we see ourselves making in-roads? Yes, of course. Otherwise, we wouldn’t be here, and you would not see increased commitment, in terms of research in the R&D centre. There is equal competition in the automotive sector. So, we are not coming from a monopolistic situation. We have had a strong and successful experience in a competitive market. We believe as markets evolve and change, if a new player wants to make an impact and become a significant contributor to the industry, what it needs is disruptive innovation and products, which is why we are here.
With its tractors, the Bolero and the Scorpio range, M&M has a very strong brand image in rural areas. How can Mahindra 2 Wheelers avail of this?
Yes, that’s one of the reasons why we have been optimistic about our chances. Of course, it is a typical industry to enter; there are entrenched players. One of the ways in which Mahindra could contribute is through automotive and mobility technology. These are not alien to us. We enter the market with sophisticated technology; we don’t have to build new technology. We know how to build internal R&D capability. We come in with a known brand and a very strong rural network and brand. This is where future mobility markets in India would grow.
Is inorganic growth in the two-wheeler segment as important to you as it was in other sectors?
The acquisition of Engines Engineering was undertaken by Systech. It was not carried out by the two-wheeler arm. However, we had early access to technology and support, as it was under the same group. We also secured an early entry through the acquisition of Kinetic. This is phase-II, one in which we put our roots deeper into the ground. We are heavily investing in our own robust and organic R&D centre and creating new products and platforms on our own. We would spend Rs 500 crore on R&D over the next five years. As far as acquisitions are concerned, right now, the focus for Anoop (president, two-wheeler segment) and Viren (senior vice-president, strategy & marketing development, two-wheeler segment) is to make the brand salient in India. However, at the same time, exports are very much on our agenda. We are opportunistic; I can’t say we don’t look at exports. In the next two years, we plan to export 20 per cent of our production to African countries.
You said you have a road map for recording revenue of Rs 20,000 crore by 2020 from the two-wheelers business. How would you achieve that?
In the eco-system of mobility we are in, two-wheelers play a critical role. This is because two-wheelers are a consumer’s first exposure to the Mahindra brand in the entire mobility space. When a person buys his/her first mode of motorised transport, it is a two-wheeler. We would like the person to experience the Mahindra brand, as soon as he/she opts for motorised transport. The two-wheeler brand is strong enough to be an appropriate introduction to the Mahindra universe of mobility.
(With inputs from Hrishikesh Joshi)