Mahindra 2020 AUSTRALIAN GRADUATE SCHOOL OF MANAGEMENT UNIVERSITY OF NEW SOUTH WALES

Transcription

1 Mahindra 2020 AUSTRALIAN GRADUATE SCHOOL OF MANAGEMENT UNIVERSITY OF NEW SOUTH WALES

2 Agenda Ø Introduc*on Ø External Analysis Ø Internal Analysis Ø 2020 Strategy Op*ons and Recommenda*ons Ø Implementa*on Plan Ø Risks and Mi*gants Ø Conclusions

3 Modern Mahindra Financial Services Farm Equipment AQermarket Mahindra Partners IT Accept No Limits Alterna3ve Thinking Driving Posi3ve Change Automo*ve Rev: INR 760B NI: INR 46B Hospitality Core Purpose: Challenge conven-onal thinking and innova-vely use our resources to drive posi-ve change in the lives of our stakeholders across the world. Aerospace & Defense Real Estate Two Wheelers

4 External Analysis Market 69% of India popula*on is rural (833M) Rural India contributes over half of the GDP Low bank penetra*on of 47% 409K unserved villages Compe33on Banks have tradi*onally stayed in urban environments 11 approved payment banks NBFC have expanded rapidly in the last 20 years Customers Rural and semi- rural Primary source of income related to agriculture Collateral for loans are the financed assets themselves and land 58% of rural households with 56% of rural income

5 Internal Analysis Capabili3es 1100 offices 14K employees Presence in 240K villages Very good understanding of rural India: cash flows and income sources Weaknesses Very low penetra*on in the non- agricultural households High dependence of households that have land as collateral Aspira3ons Globally admired Challenge conven*onal thinking Con*nue aggressive growth Expand into the small and medium- size enterprise segments

6 Analysis Takeaways S*ll a large opportunity in rural India Increasingly compe**ve Indian market Untapped rural markets abroad Indian expansion & Interna*onal replica*on

7 Strategy OpIons Exis3ng Customers Exis*ng Products Sell more to current market Expand to more urban areas New Products Payment bank Expand to other rural areas New Customers Expand within India to urban Expand within India Expand interna*onally to areas with Group presence interna*onally to areas with Group presence Expand within India Expand Interna*onally Develop new products e.g payment bank and SME financing Key Ques*ons: 1. S*ck with core capability in rural or expand to urban to capitalize on government programs? 2. How to maximize payment bank opportunity? 3. Expand to Interna*onal markets?

8 Mahindra should build on its core in the rural areas and capture the unserved market including non- farm rural India Market India has 650k villages. Mahindra Finance currently only in 37% Government policy will introduce 6 million more house in rural areas Es*ma*on that 250 villages are commercially viable opportuni*es Non- farm account for 42% of rural households Capabili3es Has established compe**ve advantage Good understanding of rural segment cash flows and sources of income Lacks the capacity to compete with bigger players

9 Pursue Payment Bank opportunity as a lean opera*on subsidiary Market Segment as defined by government fits with exis*ng customer type Opportunity to deepen rela*onship with exis*ng customers Emerging industry in a large market changing demographics Capabili3es Technology capability exists with partner company Tech Mahindra Local network to run opera*on exists

10 Mahindra Finance should expand to interna*onal markets Market South Korea, South Africa Mahindra group footprint in these markets tractors vehicles Capabili3es Growth model is repeatable in desired markets Local network to run opera*on exists

11 Mahindra Finance Strategy 2020 Build on core to dominate rural business Explore opportuni*es to expand into adjacencies Expand to interna*onal Markets

12 ImplementaIon Stage 1: Indian Expansion Further Expand into rural India. 80,000 New villages per year Objec*ve of 100% rural Indian Coverage by 2020 Penetrate SME (non- agricultural) market Stage 2: Interna3onal Expansion South Korea 10,000 New villages per year South Africa 5,000 New villages per year Methodology U*lize exis*ng tractor exper*se Duplicate tested & successful Indian business model

13 ImplementaIon Rural India South Korea South Africa 6 Months 12 Months 18 Months 36 Months Beyond

14 ImplementaIon: CapabiliIes Established Presence Current Capability India S. Korea S. Africa High Low Low Ac3on Manpower High Low Low 15,000 New hires (12k India, 2k S. Korea, 1k S. Africa) Technology Medium Low Low INR 45M Tech investment Administra*ve Resources High Low Low 1,150 New offices Financing High High High Market Research High Low Low Invest in S.K. & S.A. research

15 Risks & MiIgants P r o b a b il i t y Risk Mi3gant Distrac*on from core market Independent interna*onal teams Financial services risks Low customer understanding & adop*on Quality collateral, market research, local authori*es Market research, locally tailored sales Severity

16 Conclusions Build on core to dominate rural business Explore opportuni*es to expand into adjacencies Expand to interna*onal Markets QuesIons?