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Old 29th May 2010, 23:11   #1
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Default Is Mahindra simply on a buying spree and a predator for losing companies?

Of late M&M is on a buying spree.Non automobile companies include Satyam that was nearly falling apart. Satyam as a new Infotech company now has got some synergy, lately with the Mahindra support.
But what I am dwelling upon are the automobile companies starting from Kinetic. Very little has changed in Kinetic products but for the newly appended brand name being added.The product portfolio which was lifted straight from the Kinetic days, is most unpopular in the market. Some newer dealerships are being added now and thats all.
The Logan brand buyout from Renault for India was another place where it quickly bought out from the French company, but one is not really sure what Mahindra will get out of the deal? Sales? There's no encouraging figure in the last months sales for the discounted Logan.
The Reva-Maini buyout though with some futuristic goals and ambitions may be a non-starter right now.After all, no one will rush to buy the micro cars simply because they are green and the company is Mahindra owned now.
Mahindra's SSangyong Motor buyout ambition is another leap by the company to acquire a loss making S. Korean company this time.Maybe this deal works out in Mahindra's favour, as both are SUV makers, but with so many sickly companies on its portfolio does Mahindra have a multi-speciality economic hospital with ICU's/ICCU's to nurse and treat these ailing and sickly companies?

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Old 30th May 2010, 09:40   #2
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I think some long term goals have been set and the current acquisitions are calculated moves the company is making. The Logan marked M&M's foray into the sedan segment & it has adequate possibility of becoming a hit if it is facelifted & the boxy looks are improved upon. The Maini-Reva stint might help in implementing hybrid-electric technology(re generative braking & the like).

I agree with your Kinetic viewpoint, they have little recognition now, Honda, as an independent is ruling the roost.

It has always been the French, is it, put half in & pull all out. First, the PAL-Peugeot alliance & now this, now who'll trust a Datsun with a Renault collaboration(Nissan).
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Old 30th May 2010, 16:58   #3
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In case of Satyam, what Mahindra got was a perfectly good company with lots of customers and employees. The only sick part were its old proprietors who are now behind bars.

In case of Kinetic, my cousin brother had its dealership and he regretted the decision to get involved in that. But what I have learned from him is that the problem was with company's leadership. So with this purchase Mahindra gets a company with large product portfolio without its sick leadership.

Logan is again a very good buy as Mahindra gets a nice small-medium size vehicle platform, just look at what Renault have done. Mahindra should/would do same. Reva also is a perfectly good buy.

Now as far as SSangyong is concerned, the only reason anyone should be interested in this company is its IP. And for $250 - $300 million it is absolute steal because it would cost LOT more money and time to develop all that indigenously. For same reason SAIC bought it for $500 million, and like good Chinese they stole everything, but Koreans soon learnt what Chinese were upto so SAIC were charged for violation of law as IP that was stolen was developed using government funding. But SAIC doesn't care as S.Korean market isn't that important for them and they got what they wanted.

Now the question is, will the Koreans allow new owners to do that again ? If buyers are confident of that then it makes perfect sense to buy SSangyong. I hope Mahindra and Ruias work together and promise to transfer ownership once then have copy-pasted everything. ;-)

Looking at what Mahindras have achieved, I have to admit that they are true Chanakians, Bajaj-Munal-Hinduja-Birla-Kirloskar and others should learn from them.

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Old 30th May 2010, 21:18   #4
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They are just growing inorganically and diversifying its product mix.Mahindra group depends heavily on its tractors for revenue.It has entered real estate and Sezs also in the recent past.
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Old 30th May 2010, 22:24   #5
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Diversifying is a way to mitigate risks. Image if Mahindra only continued making old jeeps and tractors till this date? Buying sick brands and companies gives them a fair deal. for example 100 odd crores for Kinetic is pea nuts. Even if they remain a small player in scooterette segment even 1 or 2 % share in long run is big money.

The only thing they must be careful of getting into too many debts to acquire companies. TATA paid though its nose during tough times. I hope Mahindra would reap all benefits before next fall happens.
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Old 30th May 2010, 22:47   #6
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@anjan_c2007, very relevant thread indeed.
@anmol2k4, Good post there. Yup, as far as MM are concerned each new acquisition brings in some of the absolutely essential components for growth/survival: Technology, expertise, people, diversified portfolio.

While it is inevitable that some of the acquisitions may fail to click, there is no doubt that MM is growing and diversifying in a phenomenal manner.

You can find an example in not only 2/3 wheelers. Just think, how many MM Powerol DG sets you have seen today?
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Old 31st May 2010, 10:57   #7
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In my opinion, it is not a case for "bhago Mahindra as gaya" or "so ja munna... nahin to Mahindra aa jayega", but a wonderful case of consolidation of position in the competitive markets.

Four major examples that I would quote here are as under:

1. Satyam - With Tech Mahindra already in full swing, which was albeit a relatively struggler as compared to Satyam, the acquisition of Satyam enabled Mahindra brand to grow in stature in the IT line. Obviously it would attract & retain talent pool in Tech Mehindra as well, which was difficult in the past.

2. Mahindra Renault - This would help Mahindra enter the passenger cars business in its own brand. I have no doubt that not only there will be refurbished Logan but an array of other cars as well (in the future).

3. Reva - Fuel Cells & electric cars are the future. Do I need to say anything more?

4. Kinetic - Except the Kinetic Honda (2-stroke) scooter, do they have any successful model. But, they have the knowledge & facilities for making 2-wheelers + existing dealer network, which Mahindra will exploit to the core to fulfil their 2-wheeler dream.

In my opinion, these acquisitions are meant to exploit synergies of the two companies, & have enabled Mahindra to up their brand value to great extent. I would rate these as smart business tactics, & not bland gobbling up of competitors.
If this was not the case we already have HM, Premier, Sipani, many small IT companies, etc that they would have eaten up to swell their belly.
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