‘We should hold our own and fight it out’

Pawan Goenka has an appropriate analogy for his company which offers a host of mobility solutions right from two-wheelers and pickups to cars and utility-vehicles.

“The challenge that we have is to get the best out of a nuclear family within a joint family. While we run so many different businesses, each of them needs to be nimble and understand its customers, competitors and technology in its own way,” Mahindra & Mahindra’s Executive Director & President (Automotive, Farm Equipment and Two-Wheeler Sectors) told Business Line .

As his designation suggests, Goenka has quite a lot on his plate but clearly enjoys the responsibilities and challenges ahead. He was the one who spearheaded Project Scorpio over a decade ago, marking the beginning of an astonishing growth script since then for M&M.

Each of the businesses today, he says, should benefit from its siblings across the Mahindra stable. “It is like a joint family in a multi-storey building where each has its own hall/kitchen but yet have a common kitchen and hall to come together,” he adds.

This is the core of the company’s business model where the back-end synergies for the auto and tractor business, for instance, have resulted in significant cost benefits with common sourcing. On the front-end, the brand’s strengths in tractors and SUVs can perhaps come in handy for its two-wheeler business.

For the moment, though, Goenka and his team are all charged in a fiscal year where a new Government is in place and growth for the auto industry should, hopefully, be back on track soon. “On the auto side, the worst is over and we will see a turnaround this year. Sure, there will be competition to reckon with for M&M but we should hold our own and fight it out on quality, price, design and technology,” he says.

Next calendar will see the company launch two crossover utility vehicles (CUVs) which will be competitively priced and hopefully bring back the growth in its core business. “Everybody says we have lost market share in UVs but the truth is that we do not have CUVs. We are weak here and the next two products launched in 2015 will fill this need,” Goenka says.

It is also his view that the growth in UVs (percentage wise) will exceed passenger cars for another 2-3 years. “As much as people think of hatchbacks and sedans as two different segments, CUVs and UVs should likewise be seen differently,” he explains.

The M&M boss also acknowledges that smaller mobility solutions cannot be ignored in a country as diverse as India. A case in point is the Tata Magic Iris which is doing brisk business as a compact taxi in Kerala. Bajaj Auto, likewise, has been in the news for its RE60 quadricycle which is due to be launched in the coming months.

“We have the Gio which is not doing very well but it is a nice four-seater which we have not been able to cash in on adequately. The product meets safety needs and we will work on this segment,” Goenka says.

Pickups are another priority area for M&M where it is the clear market leader. “Last quarter was good and we have some interesting things coming. It is an important product segment for us and we will keep our eyes on that space,” Goenka says. Tractors, which fuelled growth last fiscal, are expected to grow by around 10 per cent in 2014-15 even as the El Nino spectre looms large.

What irks Goenka is the proliferation of “anti-SUV talk” which he believes is absolutely unjustified. “It is not as if the landscape is only dominated by high-end SUVs but there are a host of large and small options which are not so bad when you look at SUVs with an unbiased view,” he says.

SUV critics, in his view, should look at what these mobility solutions are meant for instead of being perceived as something completely undesirable. By the end of the day, they form an important mode of transport across rural India, as is evident in the growing numbers of the Bolero and Scorpio.

Of course, the main trigger for this ‘anti-SUV’ sentiment was that these vehicles were seen to be making the most of subsidised diesel but this is no longer the case. With steady price hikes since January last year, diesel is barely Rs 15/litre cheaper than petrol. As a result, manufacturers like M&M are readying petrol options for their CUVs even while large SUVs are powered by diesel.

The Budget is due early next month and Goenka has already gone on record to say that the Government should not reinstate the old excise duty levels. The UPA regime had announced cuts in its February Interim Budget which are applicable till June 30. Yet, Goenka and most of his counterparts say the lower duties must prevail till the next Budget in February 2015 as the auto industry is still not out of the woods.

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