PROFILE is one of the largest across the globe,

PROFILE OF THE INDUSTRY

The automobile industry
in India is one of the largest across the globe, attributing to 7.1 per cent of
the Gross Domestic Product (GDP) within the country. The Two Wheelers segment
with an astounding 80 per cent hold on market share leads the Indian Automobile
market. This is seen as the result of a growing middle class and an ever
expanding population of youth. Additionally, an increase in the interest of
companies in exploring the rural markets has further aided the expansion of the
above mentioned sector. The overall Passenger Vehicle section has 14 per cent
market share.

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India also features
prominently as an auto exporter and has strong export growth expectations in
the years to follow. In April-March 2017 exports of passenger vehicles and
Commercial Vehicles saw a growth of 16.20 per cent and 4.99 per cent
respectively. Additionally, several initiatives by the Government of India and leading
automobile players in the Indian market are further expected to grab attention
by putting the country on the map by making India a leader in the two-wheeler
and Four Wheeler market by the year 2020.

There has been a
progressive and steady growth in the production of passenger vehicles,
commercial vehicles, three wheelers and two wheelers.  The figures have grown from 5.41 per cent,
being 24,016,599 vehicles in the year 2016 to being 25,316,044 vehicles in the
year 2017.The sales of passenger vehicles, commercial vehicles and two wheelers
saw a growth, specifically 9.23 per cent, 4.16 per cent and 6.89 per cent
respectively. This surge was seen between 2-16-2017 in the months of April and
March.

Expansions were also
seen in the electric sales section. India’s electric vehicle sales surged by
37.5 per cent to 22,000 units between 2016 and 2017. The country’s Government
has developed the vision to see six million electric hybrid vehicles in India
within the year 2020 and owing to this factor we can expect to see and
increased demand of these vehicles mainly because of lowered energy storage
costs.

Most recent developments
have seen numerous auto manufacturers making heavy investments in multiple
segments of the industry in a bid to keep up with the ever growing demand. This
was especially seen in the last few months. In accordance with data received
and released by the Department of Industrial Policy and Promotion (DIPP) in the
time spanning from April 2000 to June 2017, the industry has attracted Foreign
Direct Investment (FDI), from numerous bodies, worth US$ 17.40 billion.

Listed below are some
of the major investments and developments in the automobile sector in India:

A subsidiary of Jindal Group, JSW
energy, signed a Memorandum of Understanding (MoU) to set up an electric
vehicle-manufacturing company at a cost of Rs 4,000 crore (US$ 613
million) which will be capable of producing 2,00,000 electric vehicles annually.
This memorandum was signed with the Government of the state of Gujarat.
Tata Motors invested Rs 4,000 crore
(US$ 612 million) in the year 2017.   The
major portion of this investment was utilised by passenger vehicles i.e.
Rs 2,500 crores (US$ 375 million) and the portion not accounted for by the
above mentioned i.e., Rs 1,500 crore ($225 million) will be utilised as
and when required by the company over the years to come. 
In the summer of2017, Tesla, known
famously for their electric car manufacturing was to introduce products in
India.
The government of Andhra Pradesh is
also set to make giant investments that will result in setting up a
factory in Penukonda in Anantapur district. They are looking to sign a memorandum
of understanding (MoU) with Kia Motors. The company will invest US$ 2
billion on this plant with the manufacturing capacity of 3,00,000 vehicles
per annum.
Various automobile manufacturers are
also vastly exploring the agenda of introducing driverless and self-driven
cars in the country. These include globally renowned companies such as
Audi and more local/ national companies as Maruti Suzuki and Mahindra
& Mahindra.
With an impending merge with TVS
Motors in Hosur, Tamil Nadu, BMW is making a bold move with plans to
produce a local version of motorcycles having capacity below 500CCand also
the G310R.
Hero MotoCorp is making bold moves to
make an impact and leave a mark in the Indian Electric Vehicle industry. They
have done so by going after the electric vehicle programme and making an
investment of US$ 30.75 million (205 crores). The investment has been made
to acquire a 25- 30 per cent stake at Ather Energy Private Limited, a Bengaluru
based start-up that is technologically oriented.
Like most of the major cities in
India, Chennai has also been targeted for related changes. Keen company,
Ford Motor Co. intends to invest 195 million US$ (Rs 1300 crore) to
develop a global technology and business centre. The aim is to design it
as a product development hub while also providing mobility solutions and
business services for India and other markets at large.

An avid encourager of
foreign investment, the Government of India allows one hundred per cent of it
in the automobile industry as well, that too by the Foreign Direct Investment
under the automatic route.

 

Some of the major
initiatives taken by the Government of India, for betterment of the situation
within the country, are as follows:

Fossil fuel imports are at an
all-time high. The government needs to look for alternative fuels that
will also be cheaper, like methanol for instance. Additionally, the
government plans on introducing, for the purpose of road and water
transportation, biofuel vehicles.
The duty on chassis for ambulances were
dropped from 24 per cent to 12.5 percent. The government also increased
their support to the vehicle industry by upping custom duty on Completely
Built Unit of commercial vehicles. This was a steep jump from a mere 10
per cent to a massive 40 per cent.
Talks have been in the line about the
introduction of a new Green Urban Transport Scheme with Central Government
assistance which is pegged at an assistance of Rs. 25,000 crore. This scheme
will aim at boosting the growth of urban transport along low carbon path
for substantial reduction in pollution and providing a framework at the
tri level of Nation, state and city for funding urban mobility projects. This
is to be achieved with minimum recourse to budgetary support by
encouraging innovative financing of projects.
As brought to light in the Auto
Mission Plan (AMP) 2016-26, the Government is expectant that passenger
vehicles will triple and become 9.4 million units by 2026. In light of this,
they aim to make the main initiative of ‘Make in India’ the automobiles
manufacturing sector.
For Manufacturing of Electric and
Hybrid Vehicles in India and faster adoption of the same, the Government
has developed an ingenious scheme. This falls under the National Electric
Mobility Mission 2020.  The National
Electric Mobility Mission 2020 seeks to further progress three main
agendas: (i) reliable hybrid electric and hybrid vehicles (ii) affordable
electric and hybrid vehicles and (iii) efficient electric and hybrid
vehicles.

Multiple factors assist
the automobile industry. These include availability of skilled labour at low
cost, robust R&D centres and low cost steel production. Furthermore, other
provisions are encompassed in this system such as innumerable opportunities for
investment, various forms of employment, both direct and indirect and also to
both skilled and unskilled labour.

The automotive market
in India is estimated to grow quite rapidly with current numbers posing a 10 to
15 per cent increase to reach the US$ 16.5 billion by 2021 which stood
originally at a mere US$ 7 billion in the year 2016.  The potential it holds is immense. It has the
ability to produce and generate by the year 2026 a revenue of US$ 300 billion
per annum. Additionally, it will provide 65 million job opportunities and the
will figure a 12 per cent of the Gross Domestic Product of the country.

According to Mr
Guillaume Sicard, president, Nissan India Operations, the income tax rate cut
from 10 per cent to 5 per cent for individual tax payers earning under Rs 5
lakh (US$ 7,472) per annum will create a positive sentiment among likely first
time buyers for entry level and small cars.

 

For this study, the focus is given to mergers that have taken place in
the automobile industry. The following mergers have been taken in the purview
of this study.

 

PROFILE
OF THE COMPANY

a.     Mahindra
& Mahindra- Schoneweiss

 Swift action followed thought. The Mahindra brothers joined hands
with a distinguished gentleman called Ghulam Mohammed. And, Mahindra &
Mohammed was set up as a franchise for assembling jeeps from Willys, USA. 
When K.C. Mahindra, the then Chairman of the India Supply Mission, visited the
United States of America Mahindra & Mahindra was established on October 2,
1945.  There, he met with Barney Roos who
was the inventor of the rugged ‘general purpose vehicle’ or what was famously
known as the Jeep. This meeting triggered a flash:” wouldn’t a vehicle that had
proved its invincibility on the battlefields of World War II be ideal for
India’s rugged terrain and its kutcha rural roads?”

When India became an independent nation two years later, Mahindra &
Mohammed changed its name to Mahindra & Mahindra. This change is owed to
the migration of the other partner Ghulam Mohammed who moved to Pakistan due to
the partition. Following his move he became the first Finance Minister of
Pakistan.

Globally, the sole Indian company of the top three tractor manufacturers
in the world is Mahindra & Mahindra. 
This well renowned group has made a dent and marked its presence in
prominent sectors that contribute and stand out in the economy of India. The group
comes equipped with state of the art facilities not only in the country, but
also abroad whilst providing a livelihood through employment to over 5,.000
people worldwide.

Mahindra & Mahindra has widely impressive manufacturing facilities with
extremely steep levels of vertical integration. The hallmark of the company is
its versitality and ability to meet the diverse needs of the population. Their base
reaches out and spans to both rural and semi urban customers, defence
requirements and luxurious urban utility vehicles or SUVs. Their manufacturing
plants have the staggering ability to meet latest demands with growing demand
and state of the art technology that never fails to keep up with the times. Possibly
some of the best ever seen equipment and modern technology can be seen at their
factories and manufacturing outlets. As a result of this, employees remain well
challenged while also enjoying the challenge of meeting the task with unique
ideas. Most prominent are its plants in Mumbai and Nasik which manufacture
multi–utility vehicles and engines. More of the same is also produced a at the
Igatpuri plant. Utility Vehicles, Light commercial vehicles and 3 wheelers are
manufactured at the Zaheerabad plant in Andhra Pradesh and finally,
three–wheelers are manufactured and produced at the plant in Haridwar.

The business area of the company spreads to
various forums:

Automotive sector

The company manufactures & markets utility vehicles and light
commercial vehicles each of which includes three wheeler vehicles. The three
are (i)Scorpio, (ii) Bolero and (iii) Champion. The company also exports its
products to several other continents and countries including those in Europe,
Africa, South America, South Asia and the Middle East. Mahindra & Mahindra
has a tie up with Renault. This is specifically and solely for the production
and marketing of the 4 wheeler, the Logan. Internationally,  Mahindra is also into the production of heavy
vehicles i.e., trucks and buses. The company has entered into a joint venture
with Navistar in an effort to better produce diesel engines and trucks.

Farm equipment

Mahindra & Mahindra farm equipment segment has presence in six
continents and has a worldwide network of 800 dealers. The farm equipment
segment of Mahindra & Mahindra is present all over the world. It can be
seen in six continents and has a worldwide network of 800 dealers.  In totality, taking into account productions
from India, USA, China and Australia the combined production capacity is
1,50,000 tractors a year. The company is also an active participant in the
world of agri business.

Trade, Retail & Finance

Mahindra’s Intertrade Division lies in the production and manufacturing
of steel & steel  and also related
services. It offers steel raw materials, metals, ferro alloys, etc. It also
engaged in the processes involving Cold Rolled Grain Oriented (CRGO) and Cold
Rolled Non Grain Oriented (CRNGO). These are steels that are required for
transformers and compressors. Also,. Mahindra Retails has commendable
partnerships with globally recognized names and brands such as Lego, Disney,
Mattel and others. They are also into distribution deals with the same.  Other ventures include the financing of
tractors and other vehicles while also being engaged in insurance brokerage.

Infrastructure

 Mahindra and Mahindra recently entered
into the sector that works with infrastructure development. They participate in
real estate deals, SEZs, hospitality, project engineering and design. This section
branched out into other ventures and has resulted in the creation of Mahindra
Holiday & Resorts, Mahindra Lifespaces Mahindra World City.

Information Technology

This branch is referred to as Tech Mahindra and provides solutions
& services to tele-commucation majors including Alcatel, AT, BT,
Convergys, Ericsson and O2. There are several others as well. The company also
has a hand in business process and technology consulting services through
Bristle.

Systech

This sector is engaged in the production and supply of automotive
components. The produce forged and forged / machined components, gears and
composite products.

 

 

Speciality Business

This division procures and maintains other companies like Mahindra
Defence a section that is dedicated to the manufacturing of defence related
vehicles & Mahindra Ashtech.

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