Mahindra War Room 2015 AFS - Powertrains Caselet

MAHINDRA AUTOMOTIVE & FARM SECTORS: POWERTRAINS BUSINESS CASELET

Mahindra Automotive & Farm Equipment Sectors (AFS) consist of businesses ranging from Automotive (including Cars, UVs, Trucks and Buses), Farm Equipment (including Tractors), Agri-business (including Seeds, Crop Care and Applitrac equipments), Construction Equipment and Powertrains (Engines, Transmissions & Gensets). This caselet pertains to the Powertrains Business, and is independent of other caselets pertaining to Automotive, Trucks, Farm Equipment and Agri-business.

BUSINESS BACKGROUNDMahindra Powertrain Divison was created to unlock the value of in-house Powertrain development and manufacturing capabilities, and consists of the Powerol business, Swaraj Engine business and the Mahindra Heavy engines business, supported by Powertrain Technology Centre and Advanced Engineering facilities at the Mahindra Research Valley and manufacturing facilities.

Mahindra has a wide range of diesel and gasoline engines starting from 0.6 litres to 7.2 litres and Powertrains up to 400 N-m torque output. Way back in 2002, Mahindra started selling engines for Diesel Generators, to fulfill Indian customers’ need for a reliable power source. This business originally started as a strategy to increase utilisation of the engine plantS, during a period of slowdown. But the outstanding customer response to Mahindra’s gensets, prompted them to create the ‘Powerol’ brand of Diesel Generator sets. Powerol’s major revenue streams are Powergen engines & gensets (70%), Service and spares (24%), engines for industrial applications (3%) and Telecom energy solutions (3%). Though Powerol is among the Top 3 in the Indian diesel genset industry by volume, its product range is limited to 200 kVA and almost 80% of its sales come from gensets of 62.5 kVA or smaller. This is in contrast to Industry Leader Cummins and Kirloskar, whose gensets have a range of up to 3000 kVA.

While forming the Powertrain Division, Mahindra benchmarked with global Powertrain OEMs such as Cummins and Fiat Powertrains. Cummins is strong in Engine Technology, with forward and backward integration across the globe. Fiat Powertrains, on the other hand, has developed supplier relationships with many Auto OEMs for supply of engines and transmissions, gaining 41% of its revenues from non-captive customers outside of the Fiat/CNH Group.

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Mahindra War Room 2015 AFS - Powertrains Caselet

LIVE CHALLENGE: POWERTRAINS 2020 BUSINESS STRATEGYThe Powertrain Division has current revenues of USD. 156 million (about INR. 1000 crores) during FY15, and has aspirations to achieve external revenue of USD. 1 Billion by FY21. The Powertrains Division is open to all opportunities in both the domestic and the international markets, across product categories of Gensets, Engines and Transmissions, as well as inorganic growth through acquisitions of large or small players.

What should be the key building blocks on which the Powertrain Division can focus on, to realise this challenging, but inspiring aspiration? How can Powerol grow its existing domestic business? Is there an opportunity for Mahindra to grow in the Industrial Engines business from the current level? Is there an opportunity to follow Mahindra Automotive & Farm Sectors’ global footprint for growth? Is there a global opportunity for Engines & Transmissions among non-captive customers in BRICS, Europe and South East Asia? Are there any potential targets for acquisitions in Engines, Genset OEMs and Tractor OEMs? Should Powertrain target established players much bigger than its size for growth, or smaller players who would give entry to new markets and capabilities?

Based on the above, develop a strategy for the Powertrain division to realize its aspiration to realise external revenues of USD 1 Billion FY21.

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