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News & Features M&M infuse Rs 500 crore into business, step up efforts to capture two-wheeler market
M&M infuse Rs 500 crore into business, step up efforts to capture two-wheeler market
Posted on 22 May 20123,017 Views Comments
Will go into setting up of a strong domestic R&D centre led by P S Ashok, development of new products and has already set up an all new assembly lines for scooters and motorcycles at its Pithampur plant with a capacity of 1 million units
Preparing for the long haul, India's largest utility vehicle major, Mahindra and Mahindra is taking a fresh guard by rejigging its entire two-wheeler business - from the shop floor to R&D, from distribution to introducing a slew of new products in a bid to capture a slice of one of the world's fastest growing two-wheeler market.
Anoop Mathur, president, two wheeler division, Mahindra & Mahindra told ET, "We have been and will continue to invest in the two wheeler industry. Over the last couple of years we have significantly strengthened our fundamentals like a cutting edge R&D facility and upgraded manufacturing capacity."
A year and half after withdrawing its first motorcycle Stallio from the domestic market due to engineering glitches, ET learns, the company has restructured its entire business right from its R&D, manufacturing, marketing set up and its product portfolio for the future.
M&M is infusing over Rs 500 crore of fresh funds into the two wheeler business, which will go into setting up of a strong domestic R&D centre led by P S Ashok, development of new products and has already set up an all new assembly lines for scooters and motorcycles at its Pithampur plant with a capacity of 1 million units.
Under P S Ashok, who was the key man behind LML two wheeler business, the company has already set up a strong team of 160 engineers, which it claims is the third largest R&D set up in the country in the domestic 2 wheeler industry
Viren Popli, senior VP, strategy & market development, two wheelers, Mahindra & Mahindra in an interaction with ET said, the company has already got approval from the board on the future investment and they have a product portfolio plan in place of 10-12 vehicles which will be across categories, as part of its mission statement till 2015-16.
And this is just the first of several moves the company is planning.
The company plans to re-launch Stallio in the next few months and has 3 more products including another motorcycle and scooter in the offing in FY-13, which will help the company build its falling volumes. Mojo, the premium motorcycle too should be launched in 12-18 months time.
The company inherited a dated R&D set up from Kinetic acquisition and over the years it put together an Ecosystem of international R&D companies, which the company now admits, didn't work.
"We were quiet for more than a year, as we were busy putting in place the infrastructure required for future growth. Having an international R&D capability alone was not enough we needed the strong in-house capability which have now put in place. Translating international design for Indian use needed a lot of work, which was one of the challenges we had with the Stallio. We are now designing in India for India," said Popli
M&M acquired the Kinetic Motors in 2008 for an acquisition price of approximately Rs 100 crore, but since then it has infused over Rs 500-800 crore in the business, yet it is incurring losses. Mahindra Two Wheelers posted a loss of Rs 169.21 crore in 2010-11 and it is piling. In FY-12, M&M sold about 1,34,750 units of Rodeo, Duro, Flyte which was a decline of 17.8% versus an industry growth of 15.27%
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