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Old 14th October 2013, 10:12   #1
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Default Mahindra 2 Wheelers to merge with auto and farm equipment biz

Mahindra 2 Wheelers, an Indian two wheeler maker previously known as Kinetic Motor Company Limited (KMCL) and now owned by business conglomerate Mahindra & Mahindra, is a fringe player in the Indian two wheeler business. In a deal valued at 110 crore rupees, Kinetic's promoters sold 80% of their stake in KMCL to Mahindra in the year 2008. Ever since, Mahindra has been struggling to turn around the two wheeler business.

Mahindra 2 Wheelers to merge with auto and farm equipment biz-mahindra-centuro.jpg

Note: Mahindra Centuro image used is illustrative in nature.

Mahindra 2 Wheelers' sales of 20,890 units in September 2013, though more than double of what the brand sold in the same period last year, represents less than 2 % of overall monthly sales in the Indian two wheeler space. Mahindra two wheelers' sales growth has been led by the Centuro commuter motorcycle, which is now the best selling product in the company's portfolio, with over 50,000 bookings recorded since the Centuro's launch earlier this year.

Mahindra 2 Wheelers sells two motorcycles (Pantero and Centuro) and five automatic scooters (Kine, Flyte, Duro, Duro DZ and Rodeo) in the Indian market. The two wheeler maker has also begun exporting its two wheelers to Sri Lanka, Bangladesh and Latin America, and has also established assembly operations in these locations. Clearly, the two wheeler maker is keen on turning itself around by boosting volumes both domestically as well as in export locations.

An additional fillip could come through the merger of Mahindra 2 Wheelers with the automotive and farm sector business of Mahindra & Mahindra. The merger will come into effect from 31st March, 2014, when Mr Anoop Mathur, the head of Mahindra's Two Wheeler Business, officially retires. Dr Pawan Goenka, an Executive Director and the President of Mahindra's Automotive and Farm Equipment businesses will also oversee Mahindra 2 Wheelers, which will be headed by Mr Rajesh Jejurikar, who is also the CEO of Mahindra's Auto and Farm Equipment businesses.

Such a merger is expected to give Mahindra 2 Wheelers access to the large cash reserve, research and development inputs, human capital, marketing and distribution muscle of the Mahindra group's successful automobile business. The volumes end of the two wheeler space is dominated by 100 cc commuter motorcycles, and companies such as Hero MotoCorp, Honda, Bajaj Auto and TVS Motors dominate this space. To challenge these competitors, who are firmly entrenched into the market, Mahindra 2 Wheelers needs all the assistance it can muster from Mahindra & Mahindra, an aspect that is likely to be taken care of by the merger.
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