Strength

1. Focus on innovation and investments in technology: M&M has invested a lot in technology, encouraging the employees to think differently and develop new ideas, products and services for the customers. They follow a 5S framework for innovation which is Space, Self-Indulgent Creativity, Simplicity,Sans (constraints - doing more with less) and Sustained Experimentation. Mahindra’s network of global R&D centers in Chennai, Bangalore, Pune, Detroit, Korea and Italy demonstrate its commitment to innovation.

2. Strong brand position in the domestic market: M&M has maintained its position as the 3rd largest Passenger Vehicle, the 2nd largest Commercial Vehicle and the largest Small Commercial Vehicle Company in India. It continues to expand its network and reach out to all corners of India, keeping in mind the philosophy of customer centricity. The Brand is connected to the emotional and intellectual foundation on which customers and stakeholders base their decisions.

3. New launches has strengthened the product portfolio: There have been 14 new product launches in year 2015-16 across product segments which helped M&M to strengthen its product portfolio and drive growth. Volume growth was sales in 2nd half of FY 2015-16 was 15.5% in India and in neighboring markets of Sri Lanka, Bhutan, Nepal & Bangladesh, it grew by 29%.

4. Number one tractor brand globally by volume: Mahindra and Mahindra is the number one tractor brand globally with sales close to 263,000 units in FY17. With the strategic acquisition of 75% stake in HisarlarMakinaVeTic. A.S. which deals in agricultural machinery and tractor cabins, Mahindra is expected to further strengthen its product portfolio in this segment.

Weakness

1. 2-Wheeler segment not doing well: M&M entered two wheeler market after acquiring Kinetic Motors in 2008, and has been a peripheral player in the market. The growth in two wheeler industry is restrained to only 3% which was around 7% in last five years. Motorcycles demand was flat due to weak rural demand but scooter segment grew 11.8% due to strong urban demand.

2. Tractor sales dependent on performance of rural agricultural sector: Mahindra has high dependence on the rural sector for its sales of tractors and other commercials vehicles which make up the major market. Rural sector revenues in Indian depends majorly on monsoon and agricultural output and any deviation in either monsoon rains or crop output would severely affect Mahindra’s sales.

Opportunity

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Threat

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References

1. Mahindra & Mahindra Annual Report 2016: www.mahindra.com/resources/pdf/about-us/Annual-Report-2015-16.pdf

2. Mahindra & Mahindra Press Releases: http://www.mahindra.com/news-room/press-release

Political

1. Strong government at the center in India ensures political stability: India currently enjoys political stability with strong National Democratic Alliance (NDA) government in the center with a complete majority. This has ensured smooth passage of economic policies and reforms which were long due. Political stability ensures business certainty and the current government is set to retain power in the general elections scheduled in 2019. The government is also pro-industry and has favored local manufacturers which bodes well for companies like Mahindra and Mahindra.

2. Good export potential in African countries which have good relations with India: Mahindra has good export potential for its entry level MUV’s in African countries which have good relations with India. While most African countries sources the bulk of its automobiles from traditional markets such as Europe and US, India has made major strides in the sector. Mahindra already exports passenger vehicles and tractors to South Africa and Kenya and is quite adept to the challenge of emerging African economies. The company has launched a range of MUV’s in the Indian market over the past two years, it can leverage the warm political relations between India and other African countries like Egypt, Nigeria and Tanzania which can be lucrative markets.

Economic

1. Positive macro-economic scenario and ‘Make in India’ initiatives: Positive macro-economic scenario and‘Make in India’initiatives by present administration is set to benefit domestic automakers like Mahindra. Indian macro-economic environment is also quite positive after the implementation of GST and projected to grow strongly in 2018, though demonetization slowed down the economy in early 2017. The falling interest rates post-demonetization will make loans cheaper, thus benefitting auto sales. These initiatives will propel India's auto industry on becoming the world's 3rd largest by 2020 and give opportunity for players like M&M to expand their global footprint.

2. Implementation of 7th pay commission and OROP bill to boost spending: Implementation of 7th pay commission and (One Rank, One Pension) OROP bill by the Indian government will help in increasing disposable income in the hands of the central government employees and armed forces. The implementation of 7th pay commission’s recommendations will bring an average raise 23.5%to more than 10 million central government employees and pensioners. Further the potential beneficiaries of OROP include 3.2 million ex-servicemen and their widows. This will greatly improve their spending power and one of the directbeneficiaries will be the companies in the automobile sector like M&M which will benefit from increased demand.

Social

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Technological

This section is available only in the 'Complete Report' on purchase.

Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

1. Mahindra’s Integrated Watershed Management Project: Mahindra’s Integrated Watershed Management Project has achieved Water Positive status for the company. The project addresses climate change as it conserves fertile soil, harvest runoff, recharge ground water table, create greenbelts, increase crop productivity etc. along with community development. Mahindra is executing the project in collaboration with the government and has successfully completed the first phase of the project. The second stage of the project will cover another 96,000 hectares of area over the next three years.

2. First Indian company to be the signatory to The Climate Group’s EP-100 program: Sustainability is an integral part of Mahindra’s operations and it is the first Indian company to be the signatory to The Climate Group’s EP-100 program. As part of the requirement of the program, Mahindra has committed to doubling its energy productivity by 2030 from the baseline of 2005.

References

1. Mahindra & Mahindra Annual Report 2017:http://www.mahindra.com/resources/investor-reports/FY18/Announcements/M-M-Annual-Report-2016-17.pdf

2. Mahindra & Mahindra Annual Report 2016: www.mahindra.com/resources/pdf/about-us/Annual-Report-2015-16.pdf

3. Mahindra & Mahindra Press Releases: http://www.mahindra.com/news-room/press-release

4. 6 surprising facts about India’s exploding middle class: https://www.weforum.org/agenda/2016/11/6-surprising-facts-about-india-s-exploding-middle-class/