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    We expect to double local employment US in about five years: Pawan Goenka, M&M

    Synopsis

    "Our plans to launch Peugeot in India have been put on hold because we are not able to justify the price that we will have to sell it at," said Goenka.

    ET Now
    In an interview with ET Now, Pawan Goenka, M&M, gives his views on the company's growth plans and the export focus the business is building. Edited excerpts:

    Pawan Goenka: As far as Mahindra Tractor is concerned, today our revenues are a little over half a billion dollars. We aim to reach about a billion five years from now. That would require an aggressive market share growth and getting into a few more territories where we have a weak presence, but the team is quite confident that given a run that we have had in the last five years, the kind of market share growth that we have had we should be able to get to that number. From US we would also be managing a Mexican operation and our Brazilian operation for tractors with US being the sort of centre for that. So that is one part of the story. The second part is on the MNATC the North American Technical Centre that we have. We are doing two things there one is of course developing products for India as well as global markets and the first one of them will be coming out this year in the form of U321 and the second one is developing an off road utility vehicle. It is a special category in US it is not a on-road vehicle, it is allowed to go only off road and we hope to launch that product sometimes towards the end of this year so that will kind of bring a four wheeler automotive presence in US in a very, very small way. Then we have electrical scooter business where we have made a good beginning. Though numbers are very small right now but I think in some sense that business could disrupt the electric vehicles business for two wheelers in US and I think we have the largest fleet of electric scooters in US today though the number is very small, the size is very small. So again aggressive growth plans there, then we have the aerospace where we sell the eight seat aircraft today and then we hope to be selling 10 seater soon for which we have got an approval in Australia so that is the fourth business and then Mahindra Finance which is financing our tractor business today will grow as the tractor business growth and Mahindra Finance already has a billion dollar almost a billion dollar in assets that have been managed right now.

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    Looking at the US market your revenues are in the order of $2 billion. What is the run rate like going forward, may be over the next three to five years?
    Pawan Goenka:
    If you look at the growth plans that we have - some businesses growing more aggressively than others depending on where we are in the growth cycle. We expect to double our revenue in US in about five-year timeframe, double employment in US, local employment in US in the same time frame and double investment in US in the same time frame.

    In terms of investment in the US so for the next couple of years?
    Pawan Goenka:
    We will double, not couple of years, but let me say five years where we are over a $1 bn right now and we expect to get to over $2 bn in the same time frame which includes investments in sort of manufacturing set up, investment in product development, lot of local sourcing that we do, supply investments that we are making so all kinds of investment, all different buckets of investment totalling to over $2 billion in five year time frame.

    Going forward off-roaders would be your target segment now. By when do you see that coming?
    Pawan Goenka:
    As I mentioned that the off-road utility vehicle we will be launching this year, this is not an on-road vehicle, this is only off-road so just want to clarify so this is not like one of the SUVs that you would see on the road. We have not made any specific plans right now to go beyond that in terms of on-road presence in US. Of course our Ssangyong brand is looking at US and we have talked about in the past now independent on how the business gets works out we may decide to launch Ssangyong in US and then consider Mahindra.

    Tell us about your electric vehicles. You are also looking to make a electric super car?
    Pawan Goenka:
    We were the first company in India to seriously think about electric vehicles and we saw an opportunity in getting into Formula E right at the beginning in season one. Our whole idea of doing electric super car with the Arrow that we had showcased in Auto Expo couple of years ago came much later and we are currently looking at developing that into a product that we sell. Right now I cannot give you a specific date by which we might have Arrow electric vehicle on the road but we are looking at it and we are working on it.

    In fact you have gone to a situation where 50% of the tractor revenues comes from overseas over the next two to three years. Will acquisition be an important part of that strategy?
    Pawan Goenka:
    Not tractor revenue, but 50% of agri equipment revenue will come from overseas and a large part of that will be agriculture equipment and not just tractors. We would do some small M&As, in fact we have already done three, we have Sampo in Finland, we have Mitsubishi Agriculture Machinery in Japan and we have Hisarlar in Turkey and we are looking at other options that might come but these will all be sort of small strategic M&As which together give us the opportunity to grow globally not just in tractors but also in other farm machineries.

    In terms of tractor specifically which are the new geographies that you are looking at?
    Pawan Goenka:
    Recently we have put thrust in three countries - Mexico, where we will be launching at the end of this month and it is being managed from US, Brazil where we have purchased a distributor's assets and we have started selling with very good initial reaction and third is Turkey where we have bought a non-tractor company but we are looking like now to launch Mahindra tractors in Turkey. They are the three markets that we will focus on, beyond what we currently have today.

    GST has just been rolled out, it is almost two weeks now, what has been the kind of impact that the auto industry has faced in the last two weeks and how smooth has the transition been?
    Pawan Goenka:
    Well, the transition was surprisingly smooth and when I say surprisingly at least I was expecting some sort of transition pains that will happen. It is a very long supply chain that we have from tier-3, tier-4 supply all the way to our dealer and I thought somewhere the chain will break but it did not. Everything in fact from day one everything was as if this is any other first day of the month and nothing specific about July 1st compared to June 1st or May 1st or April 1st.

    How will GST change your hybrid plans. Is it time to review whether there is a need for a Scorpio hybrid in the first place?
    Pawan Goenka:
    Well, I would think that the customer will not be paying the total cost of a hybrid vehicle if it is passed on to the customer and I do not believe that many companies would be able to subsidise the hybrid. I do not know other peoples’ plan but we have taken a small price hike, not sufficient to make up for the extra cost of hybrid and we probably will not be selling too many hybrids at that price and therefore hybrid will probably get phased out.

    There are many who believe that 2020 could be a tipping point for electric cars, I mean, as far as the Indian market is concerned do you see some pickup there?
    Pawan Goenka:
    The off take has been slow. We have had a lot of interest coming from the Indian government, coming from many of the potential users, fleet users for electric vehicles but off take has been slow. I do believe that we are not too far from the inflection point whether it happens in the next three months or in the next three years is a little difficult for me to say. But I think it is going to happen sooner than what many people believe.

    One final question about two-wheelers, your plans going forward?
    Pawan Goenka:
    We are working on premium bikes under the BSA brand and the Majesty brand. We will be soon announcing the date of launch of those products and that will be our direction for two-wheelers.

    And Peugeot will also play an important role there?
    Pawan Goenka:
    Our plans to launch Peugeot in India have been put on hold because we are not able to justify the price that we will have to sell it at. So right now we will continue with going in many different markets outside Europe but currently not in India.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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