PROJECT ON VALUATION
Mahindra and Mahindra group was started in the year 1945 in Ludhiana when K C
Mahindra, one of the founding fathers of the Mahindra group visited United States of America
as the chairman of the Indian Supply Mission. In America Mr. K C Mahindra met Barney Roos
inventor of the general purpose rugged vehicle or known by the name of Jeep and had a flash
of inspiration: a vehicle which has proved itself useful and reliable in the world war is the ideal
kind of wheels which India needs for its rural Indian roads and for taking the country on the
road for development and progress. Soon after action followed thought and Mahindra brothers
joined hands with a gentleman called Ghulam Mohammed ad as a result on October 2nd 1945
Mahindra and Mohammed was set up as a franchise for assembling Jeeps from Willys, USA.
Later, after two years India became independent, Ghulam Mohammed migrated to Pakistan,
and became the first finance minister of Pakistan and Mahindra and Mohammed was changed
to Mahindra and Mahindra as Mr. K C Mahindra joined hands with his brother Mr. J C
Mahindra and Mahindra are now present in all the sectors of the economy. They are in
the Automobile sector, Commercial vehicles industry, Information technology (IT) sector,
Steel Sector, Defence sector, Hospitality sector and Insurance sector. Mahindra group also
manufactures special transport vehicles for Indian Defence forces. Mahindra and Mahindra has
become a global company and they have acquired many foreign companies and assets in
foreign countries. The recent example of the same is the acquisition of ssangyong motors of
Korea by Mahindra and Mahindra. This shows that Mahindra group has not only reached
heights in India but has also left a mark in the global business environment. The diversification
of Mahindra and Mahindra into other sectors also shows that Mahindra group does not want
itself confined only to the automobile sector.
The growth of the group has been such a phenomena and the same is reflected in its
turnover which has rose to 7.1 billion dollars at present. This shows that Mahindra group is
slowly helping in the nation building process. Mahindra and Mahindra have been providing
wheels to the nation from the last five decades and have tried to play one of the pivot roles as
Mahindra & Mahindra Ltd is an India-based company. The company operates in nine
segments: automotive segment comprises of sales of automobiles, spare parts and related
services; farm equipment segment comprises of sales of tractors, spare parts and related
services; information technology (IT) services comprises of services rendered for IT and
telecom; financial services comprise of services relating to financing, leasing and hire purchase
of automobiles and tractors; steel trading and processing comprises of trading and processing
of steel; infrastructure comprise of operating of commercial complexes, project management
and development; hospitality segment comprises of sale of timeshare; Systech segment
comprises of automotive components and other related products and services, and its others
segment comprise of logistics, after-market, two wheelers and investment.
Mahindra & Mahindra Ltd was incorporated on October 2, 1945 with the name
Mahindra & Mohammed Ltd. The company was renamed as Mahindra & Mahindra Ltd in the
year 1948. The steel trading business was commenced in association with suppliers in
UK.USA. In the year 1965, the company entered into light commercial vehicles segment. They
established Vickers Sperry of India Ltd, a joint venture with Sperry Rand Corporation, USA.
In the year 1969, the company entered the world market with export of utility vehicles and
spare parts.In the year 1991, the company introduced commander range of vehicles in the
market. In the year 1996, Mahindra Ford India Limited was established, a joint venture with
Ford Motor Company, USA, to manufacture passenger cars. Also, they launched Bolero GLX
(a utility vehicle) launched in response to the needs of urban consumers. In the year 2001, the
company launched Champion, a 3-wheeler diesel vehicle. They launched Mahindra MaXX, a
multi-utility vehicle positioned with the caption 'Maximum Space, Maximum Comfort'. They
made a tie up with Renault for Petrol Engines. In the year 2002, the company launched
Scorpio, a new generation, world-class sports utility vehicle.
In the year 2003, they launched Invader, a sporty open top vehicle and MaXX Pik
Up.In the year 2004, the company launched Bolero and Scorpio in Latin American, Middle
East and South African markets. They established Mahindra Renault Ltd, a joint venture with
Renault to manufacture and market Logan, a mid-sized sedan, in India. Also, they established
Mahindra International Ltd, a joint venture with International Truck and Engine Corporation to
manufacture trucks & buses in India. In the year 2009, the company launched Xylo.During the
year 2010-11, the company acquired SYMC, a premier manufacturer of sports utility vehicles
and recreational vehicles in Korea. In February, 2010, the company had launched Maxximo in
a very competitive small 4-wheeler cargo segment . Today, the company's operations span 18
key industries that form the foundation of every modern economy: aerospace, aftermarket,
agribusiness, automotive, components, construction equipment, consulting services, defense,
energy, farm equipment, finance and insurance, industrial equipment, information technology,
leisure and hospitality, logistics, real estate, retail, and two wheelers.
Key Executives :
Keshub Mahindra- Chairman Emeritus
Anand G Mahindra , Chairman & Managing Director
Deepak S Parekh , Director
Nadir B Godrej , Director
i) key products
In automobile sector:
-Mahindra & Mahindra (Automobile Manufacturer)
-Mahindra Two Wheelers
ii) How the company is competitively placed in that product segment.
Off road performance
High availability of service centres
C. i) Which geographies are key contributors to the company’s revenue?
ii) How competitively poised is the company in that geography?
As mahindra is known for its rough tarrain quality it fits best in Indain roads and off
road drivings. Its SUV’s are low cost and highly reliable and lasting efficiency. It is
competitively poised than other companies in the same segment.
d) Key profit contributors
which product contributes to maximum of its profit.
Most of the products of Mahindra and Mahindra enjoy a fair market share and many of its
products have been a major hit in india and its neighbouring countries like south
afirica,malaysia, indonesia etc . Among these there are few best selling vehicles of mahindra
which earns maximum of it’s profits like bolero, xylo, scorpio, XUV500 in india.
Which geographies contribute maximum to company’s profit.
Mahindra & Mahindra Ltd. is one of the major automotive companies of India. Geographically
India as a whole earns maximum of its profit for the company. Most of its rough terrians like
the rural india and also semi-urban area who consider Mahindra product as an investment
rather than only a utility vehicle.
Does the company have a USP?
Yes the company does have a stong USP for encouraging ruggdness and reliablity. Its USP is
Mahindra SUV’s is to have good performance on tough terrains. The USP of each of its auto’s
is different according to that particular vehicle but as a whole Mahindra as a company make
rough and tough and low cost vehicles mainly towards Indian preference and perception.
How strong is the company’s USP?
Their USP is their capability to manufacture vehicles with having very little technological help
from foreign sources. They are very indigenous regarding this particular aspect. Their first
indigenously developed sports utility vehicle was the "Scorpio" which still is doing great in the
market. Hence, the company’s USP is quite strong for its good reliability and off road
Does the copmany enjoy important position in the market?
The company does have an important position in the Indain market due to its low maintaince,
affordable spare parts, and good resale value. These qualities weigh the company’s name ahead
of other brands even after being surrounded with tough competitors and well build players.
The name mahindra have made a honorable place in every Indians heart with being faithfull
with its products and services.
Automotive industy introduction:
Automotive industry is the key driver of any growing economy. Due to its
India’s Automobile Background
deep forward and backward connections with almost every segment of the
economy, the industry has a strong and positive multiplier effect and thus
propels progress of a nation.
The automotive industry comprises of the automobile and the auto
component sectors. It includes passenger cars; light, medium and heavy
commercial vehicles; multi‐utility vehicles such as jeeps, scooters, motor‐
cycles, three wheelers, tractors, etc; and auto components like engine
parts, drive and transmission parts, suspension and braking
parts, electrical, body and chassis parts; etc.
The Indian automotive industry has made rapid strides since de‐licensing
and opening up of the sector in 1991. It has witnessed the entry of several
new manufacturers with the state‐of‐art technology, thus replacing the
monopoly of few manufacturers.
The norms for foreign investment and import of technology have also been
liberalized over the years for manufacture of vehicles. At present, 100%
foreign direct investment (FDI) is permissible under the automatic route in
this sector, including passenger car segment.
Overall Indian Automobile Industry has shown marginal growth in FY 2012‐13 compare to
last FY 2011‐12.
According to Autobei Autobei Consulting Consulting Group (ACG), Production Production
and Domestic Domestic sales has registered registered growth of 1.20% and 2.61%, however
export is negative growth due to negative global environment and fluctuation.
One of the hot spot in world automotive industry is Indian car market. Indian car industry is
going thru turbulent times in
now. Car sales is down by more than 6% in FY 2012‐13 compare to last year of FY 2011‐12.
The main reasons are high
interest rates, fuel price, high inflation, low movement in other sectors etc. Utility vehicle
segment is having maximum
growth in this segment. Following graphs shows figures of passenger vehicles domestic sales
over the period of march –
December 2012. M&M has shown a growth of almost 27% during FY 2012 ‐13 where as Tata
Motors has shown a negative growth of 15% during the same period.
The industry analysis shows the growth of automotive industry as a whole. Even if the market
feels saturated for a new player, although if strong to compete will sustain. Even in high
inflation and higher interest rate period the sales have not been hampered much as you can see
in the picture above a constant growth. Hence the growing automotive sector has a bright
future in the coming days.
Michael Porters five forces model analysis:
The Threat of Entry of New Competitors:
Mahindra and Mahindra faces the challenge of entry of new competitors in the market. New
automobile manufacturers have come to the Indian automobile industry and many are waiting
in the line for .e.g. Hyundai Motors and Ford Motors and Kia Motors. To face the challenge
with force, Mahindra and Mahindra is positioning its brands very strongly and competitively in
the market. It is investing very huge capital in the new and existing businesses and is also
diversifying at the same time for e.g. acquisition of Satyam computers by tech Mahindra and
venturing out by the Mahindra group in hospitality industry with Mahindra holidays.
Mahindra and Mahindra have big competitors in each and every key sector in which they are
present. Their main competition is in the form of the TATA group which is present in almost
every sector where Mahindra and Mahindra is directly or indirectly involved, whether that
sector is defence, Information Technology, Hospitality, Automobiles, Insurance etc. Apart
from TATA, Mahindra group also have small and big competitors in other sectors also.
Mahindra and Mahindra is advertising very aggressively to showcase its products, offering the
same at very competitive rates, offering better value to the consumer and providing world class
products at affordable rates to survive in this cut-throat competition. Competitive rivalry can
also be handled by bringing in innovation in the business environment.
Threat of Substitute Products / Services:
The threat of substitute products or services also creates sometimes big problems for a business
and thus can affect business environment of a country as a whole. Sometimes a business fails
due to substitute goods and services offered by its competitors. Mahindra group has faced all
the challenges put across them against their products by substitute goods as products of
Mahindra and Mahindra provide value for their users at competitively low costs.
Bargaining Power of Consumers:
The consumers buying power in case of Mahindra and Mahindra is very low as the products or
services provided by Mahindra and Mahindra are unique in themselves and there are not many
substitutes in the market for the same. Mahindra and Mahindra has become the third largest
tractor manufacturing company in the world and so in this case a farmer wanting to purchase
the tractor will purchase the same without any negotiations as he knows that he is purchasing
the world’s best tractor at a very competitive price.
Bargaining Power of Suppliers:
Mahindra and Mahindra does not believe in extracting money from the users of its products but
charges for cost of inputs like innovation, labour, technical innovation and other raw materials.
Mahindra and Mahindra does not bargain with the consumers but charges only according to the
value of the products or services provided to the customers or the end users.
Conclusion of porter’s analysis:
The above analysis leads us to the conclusion that Mahindra and Mahindra have transformed
themselves into a very successful business enterprise and have evolved themselves as a very
important constituent of the Indian and the global economy. Mahindra and Mahindra have
expanded themselves into various industrial sectors like defence, automobile, hospitality etc.
and have diversified at the same time. Mahindra and Mahindra has shown that how the various
changes in the business environment can be explored and exploited by any business for its own
gain and the gain of the economy as a whole.
Summary of Management Discussion
Mahindra Group is the parent company of Mahindra & Mahindra limited. Mahindra
Group has a total of 132 companies across the globe which contributes aggregate revenue of
US $ 15.4 billon. As the year 2011-2012 was a year of different shocks it was a challenging
period for Mahindra Group as a whole. In December 2012, the Group had aspired to make
Mahindra one of the world’s 50 most admired brands who help people everywhere to rise.
The Automotive and farm sector of M&M continued to work with great customer focus. The
automotive companies along with the other subsidiary companies achieved global sales of
873646 vehicles and tractors.
In India, in spite of such challenging macro-economical environment both domestic and global
the Indian Automotive industry still recorded a growth of 6.2% (excluding 2 wheelers). The
growth of passenger segment vehicles was 4.7% with domestic sale crossing 2.6 million
vehicles and within this segment the passenger car grew 2.2% and MUV’s grew 10.0% , UV’s
recorded a growth of 16.5%, CV’s grew by 18.2% and the MHCV’s by 7.9%.
The growth across several segments in the Indian Automotive Industry was significantly lower
than predicted by SIAM (Society of Indian Automotive Manufacturers) at the beginning of the
year. This happened due to many unpredicted reasons such as inflation, hike in fuel prices,
lower economic growth , high financing rates etc.
The adverse impact on this industry was also due to short supply of labour unrest at major
automotive manufacturers, capacity storage in various links of automotive supply chain and
also the disruption of the component supply from Thialand which suffered the onslaught of the
Even after so many uncertainties the Automotive Industries have managed to grow a few
percent not according to what predicted although with less of uncertainty and more of growth
this industry has immense capacity to grow manifold times.
Mahindra and mahindra news articles
Mahindra considering 'little hike' in vehicle prices.
Source : NDTV Business
Profit and Loss :- The profit of the company may increase by some percent(very minimum) as
they are increasing the price but there is not much of sale happening in the automotive sector
as a result of which theres a chance of its sales falling.
Balance Sheet :- The company has taken debt as a result of which its liabilities have increased
but the capital work in progress has decreased as the demand in automobile sector has declined
as a result of which inventories have gone up.
India's Mahindra to open auto assembly plant in Ghana
Source : Business Standard
Profit and Loss :- The sales of the company would increase considerably as already there is a
high demand for mahindra SUVs which would inturn increase its profitability.
Balance Sheet:- They will require more funds for opening of assembly plant in Ghana which
would either be in form of debts or funds from shareholders, either way their liabilities would
go up. Their investment would also go up which would positively affect balance sheet.
Mahindra & Mahindra auto sales rise by 11 per cent in March 2013
Source : Car Trade
Profit and Loss :- Sales has gone up by 11% which shows that revenue has increased and as a
result of which profit has also gone up.
Balance Sheet:- The stock in trade has reduced and cash and bank balances have increased
Demand slowdown forces Mahindra & Mahindra to stop production
Source : Car Trade
Profit and Loss :- Production has been stopped as there is a reduction in sales of automobiles in
the overall automobile sector which has affected the revenue of Mahindra and Mahindra.
Balance Sheet:- The inventory which has been brought is lying down as there is no production
Mahindra & Mahindra to run Truck & Bus business as a new division
Source : India tv
Profit and Loss :- Mahindra and Mahindrs is planning to invest Rs 200 crore to strengthen the
existing product line-up in the trucks and buses business and Rs 300 crore to develop new
product lines, this would shoot up its expenditure.
Balance Sheet:- For this purpose they would have to either take debt or use their existing funds
which would increase their liabilities.
Mahindra gives itself three years to turn around trucks business
Source : Business Standard
Profit and Loss :- The losses of the truck business will help Mahindra & Mahindra secure a tax
write-off this year if the merger plan gets completed before April 2014. The commercial
production started in June 2010, since then the company has only managed to sell 8,000 trucks.
In comparison, market leader Tata Motors sells more than 10,000 trucks every month. The
company's accumulated losses also mounted to Rs 920 crore as of March 31, 2013.
Balance Sheet :- With the merger of the truck business with Mahindra & Mahindra, assets to
the tune of Rs 256 crore, including plant and machinery, receivables and inventory of
Mahindra Truck and Buses, will be transferred to the parent company. The merger would also
help the truck business as it will enable it to have access to Mahindra & Mahindra's financial
resources with the help of which it can pay off its debts and settle the creditors.
Mahindra & Mahindra launches Bolero Maxi Truck Plus at Rs Rs 4.33 lakh
Source : The Economic Times
Profit and Loss :- This would help increase their sales which would inturn generate revenue
for the company as it is economical and is conceptualised
to cater to the needs of urban
Balance Sheet :- This will increase the cash and bank balance of Mahindra and Mahindra and
also increase its goodwill.
Mahindra & Mahindra July sales down 21.17%
Source : The Economic Times
Profit and Loss :- Total sales of Mahindra and Mahindra at 37,096 units
21.17 percent decrease in July, 2013.The company had sold 47,059 units in the same month in
2012. This is affecting the revenue of the
company upto a great extent.
Balance Sheet :- Inventory and stock of finished goods is increasing due to low sales.
Mahindra & Mahindra unveils new variant in small commercial pick-up in Gujarat
Source : The Economic Times
Profit and Loss :- This would generate a lot of revenue from the commercial pick up devision.
Balance Sheet :- It would help in increasing the cash and bank balance of the company.
10) M&M launches Maxximo Mini Van VX at Rs 3.7 lakh, to take on Maruti Suzuki's Eeco and
Source : The Economic Times
Profit and Loss :- The Maxximo Mini Van Vx BS III is priced at Rs 3.7 lakh and is the only
diesel hard top van in the country. The company claims it is 30-40% more spacious then Omni
and offers a mileage of 18-20 kilometers per litre, thus increasing its demand over Omni and
Eeco. This would help company earn good amount of returns increasing its profit.
Balance Sheet :- The returns for shareholders would also increase if the company earns good
amount of returns and so more and more investors would like to invest in the company
expecting high returns.
11) India’s Sensex Drops to Five-Week Low as Metal, Automakers Fall
Profit and Loss :- The profit level going down shows direct relationship with
even the sales declined to a quantifying extent with the market
Balance sheet :- Automakers Maruti Suzuki India Ltd. (MSIL) and Mahindra &
Ltd. (MM) lost more than 1 percent. The rupee fell to within 0.1
Hence it is clear that the profit of the company
percent of a record low.
went down at least for that quarter.
12) Maruti to Add Small Goods Carrier Amid Competitive Intensity
Profit and loss :- Profit of the company is sure to get a hit as the
competition is intense.
Balance sheet :- Maruti Suzuki India Ltd. (MSIL), the nation’s biggest
volume, said it plans to introduce a light commercial vehicle amid intensifying competition in
the passenger vehicle segment.Maruti will
compete with Tata Motors Ltd. (TTMT), India’s
Mahindra & Mahindra Ltd.This will definitely impact the balance
sheet of Mahindra and Mahindra as their commercial vehicles will not sell off there
would be ideal stock, low utility of machinery which manufactures those cars. Although on
the other hand to deal with the competition Mahindra might improve and work more toward
producing better car by investing
13) Mahindra XUV500 improved
more on the RnD department of the company.
Source: Autocar India
Profit and loss :-Profits of the company reached new heights with the
amazing sales of
Balance sheet :-Mahindra & Mahindra (M&M) has done a Microsoft with its
XUV500, which means it has debugged its flagship SUV and brought
version 2.0 or, what M&M likes to call, the ‘zero-defect’
among all Mahindra’s commercial vehicles
of course sold thousands of
out the XUV500
vehicle. This was the biggest hit
which had gained a lot of market attention and
them and the company successfully increased its profit.
14) Mahindra Group plans 2nd World City in Chennai for Rs 4,000 crore
Source: FE BUREAU
Balance sheet :- The $16.2-billion Mahindra Group plans to set up its second
in Chennai in three-and-a-half-years’ time, for a total investment
their initial estimates, the new facility would also
sure is wealth maximization for
of Rs 4,000 crore. As per
create 33,000 jobs. This huge investment
the company. The 1st world city should have given good
results that the company took a step to open another one there, expansion and economies of
scale sure will take the company to all new heights.
15) Mahindra Profit Beats Estimates as Demand for Tractors Picks Up
Profit and Loss :- Sales rose to 99 billion rupees from 92.5 billion
tractors increased 26 percent to 71,390 units in
the year-earlier period, according
rupees.Domestic sales of
the quarter, compared with a decline in
to company data.
Balance Sheet :- Mahindra & Mahindra Ltd. (MM), India’s largest maker of
and sport-utility vehicles, reported first-quarter profit that beat
demand for farm equipment boosted sales.Net
9.38 billion rupees ($153 million) in
analyst estimates as rising
income, excluding units, increased to
the three months ended June from 7.26 billion rupees,
company said today. That surpassed the 8.5 billion-rupee median of
39 analysts’ estimates compiled by Bloomberg.
16) Mahindra & Mahindra - Operating performance in-line ; Maintain Buy – Centrum
Source: Equity Bulls
Profit and Loss :- As the overall profits of the company stood above expected the company has
still hope to increase it even after a tough
comparison with anybody in
competition tractor sales of the company has no
the market. So M n M still has profit margins to grow as the
growth of tractor sales is 8%for the next year.
Balance Sheet :- Though the automotive portfolio continues to face headwinds, FY14 tractor
sales were significantly ahead of M n M’s estimates. They are now factoring in higher tractor
growth of 12% (earlier 8%) and
8%) for FY14E. Higher
expect a drop in the automotive volumes (-3% vs. +
contribution from better realizations and margin from the
tractor segment in FY14E will largely offset the drop in the automotive segment.
Consequently, our FY14E/FY15E earnings forecast remains largely
unchanged.Operating results in-line: M&M + MVML PAT of Rs.9.1bn (17%
stood 2.5% above our estimates. Net sales of Rs.97bn (+9% YoY) were
estimates due to lower tractor realizations. EBITDA of Rs.14bn
Automotive revenues were flat YoY due to flat
4% below our
(+13% YoY) was in line.
volume and realizations. Tractor
revenues grew by 27% YoY aided by 25%/1.2% YoY volume/realizations growth.
Automotive EBIT margin came in
16.7% (+100 bps YoY)
at 11.2% (flat YoY) while tractor EBIT margin at
17) Mahindra & Mahindra to observe 0 to 6 days of 'No Production Days'
Source: Equity Bulls
Balance sheet :- Mahindra & Mahindra Ltd has announced with reference to the 'No
Production Days'. As part of aligning its production with sales requirements, would be
observing No Production Days at its Automotive Plants for a period ranging from 0 to 6 days
in the forthcoming months. The Management would be having a close watch on the market
conditions and would from time to time be reviewing such No Production Days to adjust
production in line with the demand.
18) After rapid expansion, Mahindra Retail to shut 10% of its stores
Balance sheet :-Mahindra Retail Pvt. Ltd plans to shut more than 10 stores and cut costs after
an ambitious expansion drive led to rapid cash burn and
at least 10% of its stores before the end of
115 stores. Closure of nonunavoidable realities
losses. Mahindra Retail will shut
the year, one of them said. The firm has over
performing stores, and some churn in management are
of the business, much as new stores and new management replace the
ones. Mahindra Retail lost over Rs.75 crore in cash last year on revenue of
nearly Rs.200 crore.
19) Maruti, Honda, Ford July sales up; Tata Motors, Mahindra struggle
Profit and Loss :- Profit of the company definitely went down as the sales
compared to its competitors. It was not a good quarter for
Mahindra and Mahindra ltd.
Balance Sheet :- Car makers Maruti Suzuki, Honda and Ford reported
sales, while others including Tata Motors, Mahindra &
Motors continued to struggle. Likewise,
increase in July
Mahindra, Toyota and General
Mahindra & Mahindra's domestic sales were
down 19.41 per cent at 34,490 units as against 42,799 units in the same month last year.
20) Mahindra launches Verito Vibe at Rs. 5.63 lakh, joins small car race
Source: NDTV Profit
Profit and Loss :- If demand would increase for automotives in the next fiscal then there is a
posibility that demand for verito may increase which would help generate revenue but at the
same time it has to compete with established players in the small car segment which may
inturn lead to losses.
Balance Sheet :- If it did not turn out well for Mahindra and Mahindra then its liabilities may
Business valuation is a processed set of procedures used to estimate the economic value of an
owner’s interest in a business.Valuation is used by financial market participants to determine
the price they are willing to pay or receive to perfect a sale of a business. In addition to
estimating the selling price of a business, the same valuation tools are often used by business
appraisers to resolve disputes related to estate and gift taxation, divorce litigation, allocate
business purchase price among business assets, establish a formula for estimating the value of
partners' ownership interest for buy-sell agreements, and many other business and legal
Business valuation will have its own limitations but this helps you to value a firm decide
whether to invest in it or note. Some of these methods are actually practiced in big companies
to make a lot of financial decisions.