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MAHINDRA(&(MAHINDRA(TO:(RAMESH(IYER((
FROM:(NANYANG(CONSULTANCY(
1(
Agenda(
1. Problem(Statement(2. Company(vision(3. RecommendaKon(4. OpKon(Analysis(5. ImplementaKon(6. Timeline(7. KPI(8. Financial(Analysis(9. Risk(10. Conclusion((
2(
Problem(statement(
• No(presence(in(the(urban(markets;(products(provide(low(margins(
• Government(programs(providing(new(avenues(for(growth(
• AspiraKons(to(be(a(global(player(
• Should(Mahindra(finance(sKck(to(its(core(market?(
• How(could(Mahindra(leverage(technology(to(take(part(in(the(government(programs?((
• Should(Mahindra(enter(the(internaKonal(landscape?(
! What(should(Mahindra’s(strategy(be(in(the(future(?((
Current(situaKon( Challenges(
3(
Company(Vision(
Mahindra’s(Vision(
Top(be(among(50(globally(admired(
brands(
Leading(financial(services(provider(in(semi(urban(and(rural(
India(
Transform(rural(lives(and(drive(posiKve(change(in(the(communiKes(
Build(on(your(internaKonal(
presence(of(M&M((
SKck(to(core(strength(of(presence(in(the(rural(market(Expand(to(semi(urban(areas((Tier(two(ciKes)(((
4(
Focus(on(rural(and(semi(urban(markets(
RecommendaKons(
Mahindra’s(vision(
• Expand(in(the(untapped(rural(villages((250K)(
• Focus(on(Tier(2(ciKes(in(India(such(as(Bhopal,(Bhuj(
• UKlize(the(strength(of(Tech(Mahindra((in(house(experKse)(
• Increase(brand(awareness(–(Missed(call(campaign((
! Mahindra(finance(should(focus(on(its(rural(and(semi(urban(market;(to(become(a(global(player(it(should(leverage(on(its(exisKng(partners(
Expand(in(the(global(arena(
Leverage(on(technology(
• Leverage(on(partners(and(parent(company(name(to(enter(South(Africa’s(financial(landscape(
5(
OpKon(Analysis(
Core(competency(
of(Mahindra(
Brand(name(
Product(porgolio(
Customer(base(
Good(balance(sheet(
• Op#on&1:&&Expand(towards(the(urban(market(of(India((• Market(too(compeKKve(• Decrease(in(profitability(rate(
• Op#on&2:&Focus(on(Partner(with(governmental(organizaKon(to(become(a(part(of(Jan(Dhan(yojna(• Governmental(banks(more(preferred(by(
government(in(India(such(as(SBI,(UBI,(PBI(
• Op#on&3:&&Go&back&to&the&core&vision&of&being&a&rural&+&Semi&urban&bank&
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IMPLEMENTATION(1:((THE(RURAL(STRATEGY((TIER(III)(
RelaKonship(Approach((
• Have(local(village(reps(or(coilingual(reps(that(villagers(trust(• Crossiselling(of(products((tractors,(loans)(((
Packaged(Offerings(
• Offer(packaged(deals(for(customers(on(farm(equipment,(loans(for(farm(equipment,(home(loans(
Technology(Usage(
• Incorporate(technology(chip(to(assess(insurance(premiums(
(((((Ex:(Snapshot(in(the(US(market(• Missed(calls(from(farmers(to(receive(weather(and(
technical(informaKon((80%(feature(phones)(((• Ex:(Unilever(for(product(sales((((
! Lock(in(farmers(in(rural(areas;(build(trust(in(M&M(brand(as(a(complete(soluKons(provider(
7(
IMPLEMENTATION(2:((THE(SEMIiURBAN(STRATEGY((TIER(II)(
SegmentaKon(• Focus(on(farmers(living(in(Ker(II(ciKes(with(higher(
spending(power((Bhopal,(Jalna,(Bhuj,(Satara,(Trichy)(
Technology(Usage(
• Partner(with(telecom(provider(to(enable(mobile(banking(geared(towards(loan(payments(
(((((Ex:(MiPesa(
Packaged(Offerings(
• Offer(packaged(deals(for(customers(on(farm(equipment,(loans(for(farm(equipment,(home(loans(
! Leverage(on(strong(M&M(brand(equity(as(a(auto(company((
8(
IMPLEMENTATION(3:((INTERNATIONAL(
South&Africa South&Korea ChinaBrand&presence 10 9 8
Regulatory&restrictions 8 7 2
Leverage&of&market 7 4 8
Competitors 8 5 3
Financing&growth&potential 7 6 6
TOTAL 40 31 27
! Emphasis(on(SA(while(progressively(moving(to(China(in(the(long(run(
Entry(Order:((SA(((((((((((((((((((((((((((((((((((SK(((((((((((((((((((((((((((((((((((Bangladesh(((((((((((((((((((((((((((((((((((China(
End(2015( 2020(
9(
IMPLEMENTATION(3:((INTERNATIONAL(
Market(Presence(
• Next&Steps:&Set(up(a(banking(subsidiary(/(leverage(on(bargaining(power(of(product(presence&&
Untapped(Markets(
• Next&Steps:&Enter(agrarian(economies(where(our(products(are(currently(sold((
• Ex:(Bangladesh(• Progressively(enter(emerging(Asian(countries(((((((JV(with(local(financing(companies(((((((Ex:(Indonesia,(Vietnam(
! Harness(on(the(brand(equity(of(the(Mahindra(Group(product(presence(globally(
10(
KPIs(
Rural( • Number(of(product(line(uptake/per(customer(• Increase(in(customer(base(quantum(
Semi(urban(• Acceptance(rate(of(MiPesa(service((70%)(• Decrease(in(NPA((decrease(by(4%)(
InternaKonal(• %(market(share(of(M&M(product(line(asset(financing(• Number(of(new(market(penetraKon((
11(
TIMELINE(
STRATEGY STAGETraining'of'sales'/'service'staff XChips'in'tractors X X X X XMissed'call'campaign'infrastructureMobile'banking'rollout XPackaged'deal'rollout XTaskforce'regulatory'research XNegotiations'with'local'partners XEvaluation'of'new'market'opportunities X X X
2020
Rural
Semi1rural
International
20162015 2017 2018 2019
12(
Risks(
Types&of&Risk& Defini#on& Likelihood& Impact& Mi#ga#on&
Economic( Economic(downturn(in(India(
Medium( High( DiversificaKon(of(revenue(stream((
Brand(Equity( Semi(urban(customer(believes(the(bank(to(be(too(rural(focused(
Low( Medium( Local(branding(
Product(Risk( What(if(financing(soluKons(are(not(appealing(to(foreign(customer(
Low( Medium( Re(focus(on(service(providing(acKvity((
Legal(risk( Regulatory(issues(in(foreign(markets(
Low( Medium( Minority(stake(in(Local(lender(
13(
Financial(analysis(
i40(
i30(
i20(
i10(
0(
10(
20(
30(
40(
2016( 2017( 2018( 2019(
NI(
CumulaKve(
• Number(of(vehicles(in(South(Africa(100K(• Margin(2%((• Conversion(rate(of(Indian(village(20%(• Margin(rate(3%((
(
• IRR(:(19%((• Break(even(4(years(
14(
Financial(analysis(
2016 2017 2018 2019Training'costs 1 1.5 2 2.5IT 10 5 5 5Partnership 5IT'maintenance 1 1 1
Creation'SA'subsidiary 25Legal'costs 2 1IT 15 15 15 15Marketing 5 3 2 2
Revenue'from'India 6 9 12 15Revenue'from'SA 20 21 35 40
NI J32 J1.5 22 29.5Cumulative J32 J33.5 J11.5 18
15(
Focus(on(rural(and(semi(urban(markets(
Conclusion(
Mahindra’s(vision(
• Expand(in(the(untapped(rural(villages((250K)(
• Focus(on(Tier(2(ciKes(in(India(such(as(Bhopal,(Bhuj(
• UKlize(the(strength(of(Tech(Mahindra((in(house(experKse)(
• Increase(brand(awareness(–(Missed(call(campaign((
! Mahindra(finance(should(focus(on(its(rural(and(semi(urban(market;(to(become(a(global(player(it(should(leverage(on(its(M&M(Group(
Expand(in(the(global(arena(
Leverage(on(technology(
• Leverage(on(partners(and(parent(company(name(to(enter(South(Africa’s(financial(landscape(
16(
Shukriya(
17(