mahindra case study

1. MAHINDRA AND MAHINDRA FINANCE SERVICES LIMITED:
EMPOWERING RURAL CUSTOMERS IN INDIA
Present by
• Aniket totawar
• Suraj tappe
• Sravan kumar
• Sagar
• Jahangir baba
CASE STUDY PRESENTATION

2. Case Overview:
Mahindra and Mahindra Finance Services Limited (MF) empowering rural customers in
India.
Author: Rajeev Kumra's case study focusing on rural financial inclusion
• Mahindra and Mahindra Finance Services Limited (MF):
Background:
• Parent Company:
Mahindra & Mahindra (M&M), a $15.9 billion multinational group based in Mumbai, known for tractors, farming
equipment, and diverse business operations
• Chairman and Managing Director: Anand Mahindra.

3. Chairman and Managing Director Anand Mahindra, Mahindra & Mahindra (M&M), which sold tractor and
farming equipment and had deep penetration in rural India, was a $15.9 billion multinational group based
in Mumbai. It had won many awards in 2011.
Mahindra Finance has carved a unique niche in the Indian financial landscape by providing financial
services to the underserved rural population. Also explore Mahindra Finance's strategy, its competitive
advantages, and its potential for scaling up and adapting to new markets. Its product portfolio included
vehicle loans, used vehicle financing, housing finance, personal loans, fixed deposits, mutual fund
distribution, insurance broking, gold loans and loans for construction equipment.
65% of India's population lives in rural areas.
Rural households face limited access to formal financial services due to:
Lack of documentation
Irregular income patterns
Limited understanding of financial products

4. FORMATION AND PORTFOLIO
• ESTABLISHMENT : MF was set up as a non-banking finance company (NBFC) within the M&M group.
• PORTFOLIO:
1. Vehicle loans
2. Used vehicle
3. financing Housing
4. Personal loans
5. Fixed deposits
6. Mutual fund distribution
7. Insurance broking
8. Gold loansLoans for construction equipment
OPERATION TIMELINE
• Inception: Started operations in 1995 in Jaipur, Rajasthan, with 15 branches and 100
employees.
• Growth: Expanded rapidly, reaching 648 branches across rural and semi-urban areas
in India by 2013.

5. Mahindra Finance's strategy revolves around understanding and catering to
Focus on rural markets: Mahindra Finance operates primarily in rural areas, with over 5,000 branches
across India. Understand local traditions, rituals, customs and cultural activities and to communicate with its
customers in their own language. Rural poor were more likely to be committed to repaying their loans.
Customer-centric approach: The company develops customized financial products based on the needs and
income patterns of rural customers. Its customers were primarily farmers, small traders and vehicle
operators also include small and medium enterprises (SME).
Technology adoption: Mahindra Finance leverages technology for loan processing, risk assessment, and
customer communication.
Empowering employees: They recruit local employees and invest in their training, fostering a deep
understanding of the local communities.

6. 1. First-mover advantage: Mahindra Finance established itself early in the rural market, creating brand loyalty
and trust.
2. Multinational companies and private banks focused on the top tier cities in India.
3. Deep understanding of rural markets: Their customized products and risk assessment methods cater
effectively to the needs of rural customers.
4. Low-cost operations: Local recruitment and technology adoption keep operational costs low.
5. High employee engagement: Empowered and trained employees contribute to better customer service and
risk assessment.
6. The rate of interest MF charged was lower than the traditional moneylenders but slightly higher than the
banks.
High risk: Reliance on subjective assessments and circumstantial loan defaults carries higher risk than
traditional banking models.
Scalability: Expanding beyond rural markets might require significant adjustments to the model.
Competition: Other companies might try to replicate Mahindra Finance's success in rural areas.

7. chronology of Devi's Loan Application:
Initial Loan Application to MyBank:
• Devi approached MyBank with legal documents and collateral (land) for the loan.
• MyBank initiated the loan process but later raised concerns about the clarity of her land title.
Issues with MyBank:
• A third-party agency appointed by MyBank visited Devi's office for document verification.
• The bank, citing unclear land title and lack of confidence in her business plan, requested additional collateral.
Recommendation from Kishore Jain (MF Automotive Division Dealer):
• Devi, facing loan rejection, sought alternatives.
• Kishore Jain recommended Mahindra and Mahindra Financial Services Limited (MF) due to its reputation for
supporting rural customers.
Interaction with MF:
• Naresh Bhatt and Nand Kishore from MF visited Devi's office for physical verification.
• Despite Devi's limited documentation and modest profits, Bhatt was impressed by her market
knowledge and work ethic.

8. MF's Approach
• :MF utilized a handheld device to collect Devi's biometrics, voice, and photograph for operational risk
management.
• Devi's loan proposal was assigned a unique 10-digit number for online tracking.
Outcome:
• MF approved Devi's loan, emphasizing trust in her earning potential and integrity.
• Devi expressed gratitude, highlighting MF's belief in her when conventional banks had rejected her.
Key Takeaways:
Devi's case exemplifies MF's distinctive "Earn and Pay" model, focusing on future earning capacity rather
than traditional collateral. The company's approach, emphasizing local understanding and customer-
centricity, enabled it to support entrepreneurs like Devi in rural India where conventional banks
faced challenges.

9. While elements like local recruitment and technology can be imitated, Mahindra Finance's deep understanding
of rural markets and established network are harder to replicate.
Strong brand reputation: Mahindra Finance has built a strong brand reputation for trust and reliability in rural
communities.
Established network: Their extensive network of branches and local relationships provide a significant
advantage.
Organizational Culture and Employee Engagement
Empowering culture: Mahindra Finance empowers its employees and gives them ownership of their work.
Focus on employee development: The company invests heavily in training and development programs for its
employees.
Commitment to rural communities: Mahindra Finance employees are encouraged to be active members of the
communities they serve.
Q.1 Assess MF's strategy. Is there a sustainable competitive advantage in this model? Assess whether
competitors will be able to imitaie it.

10. Benefits
Better customer service: Local employees with a deep understanding of their communities can build
stronger relationships with customers.
Risk assessment accuracy: Their knowledge of local conditions and social networks helps in identifying
creditworthy customers.
Innovation: Locally-driven solutions and feedback contribute to developing new products and services
relevant to rural needs.

11. Q.2 What is your assessment of the organizational culture and employee engagement at MF? Does it provide a
unique, distinetive and non-copyable advantage to the company?
Rural Workforce Empowerment:
Unique Aspect:
MF's emphasis on hiring a local workforce from rural areas is a distinctive organizational culture.
Employee Engagement:
By recruiting from rural colleges and relying on referrals, MF not only taps into local talent but also fosters a sense
of community and engagement among employees.
Training Initiatives:
Unique Aspect:
The establishment of the Mahindra Finance Academy underscores a commitment to ongoing employee
development.
Employee Engagement:
Training programs enhance technical and soft skills, fostering a culture of continuous learning and professional
growth, which positively impacts employee engagement.

12. Distinctive and Non-Copyable Advantage:
MF's unique edge stems from a blend of local hiring, continuous training, customer-centricity,
empathetic loan management, and tech integration. This approach not only meets rural customers'
diverse needs but also fosters a motivated workforce. This distinctive advantage, deeply tied to
understanding rural challenges, positions MF as a leader in rural finance, hard for
competitors to replicate.

13. Q.3 If MF were to adopt the same strategic model to penetrate urban markets, do you think it would be
successful? Why or why not?
Adopting the same strategic model to penetrate urban markets might face challenges for MF.
The success of MF is intricately tied to its deep understanding of rural nuances, local connections, and a
customer-centric approach tailored for rural customers.
Urban markets differ significantly in terms of consumer behavior, competition, and financial infrastructure.
The strategies that work effectively in rural settings may not translate seamlessly to urban environments.
Therefore, MF would likely need to adapt its model to suit the distinct dynamics of urban markets for a
successful transition.Make it in points

14. Q.4 Is Devi a loan-worthy customer or a risky customer who could default on payments? Could Kishore have
done anything differently?
Devi's creditworthiness is a subjective judgment. While she lacked proper documentation and collateral, her
business acumen and potential for growth were recognized by the Mahindra Finance team.
Kishore's decision to vouch for her integrity and recommend the loan was based on personal knowledge.
However, Devi's previous rejection by another bank raised concerns, and there's inherent risk in extending a
loan.
Kishore might have explored additional risk mitigation measures or sought more comprehensive information
about Devi's financial situation to make a more informed decision.