COMPANY_ANALYSIS-_MAHINDRA & MAHINDRA LID.

Industry Analysis: 1. Industry trends: Indian and Global perspectives, recent happenings Mahindra & Mahindra Ltd. is the flagship company of the Mahindra group presence in the Aerospace, Agribusiness, Automobile, Components, Defense, Energy, Farm Equipment and Logistics industries. Let take a look at the industry trends in its main line of business Automotive and Farm Equipment. Automotive Industry: The Society of Indian Automobile Manufacturers (SIAM) plans to propel the Indian Auto industry to a global $145 bn industry by 2016 whilst promoting sustainability by addressing the multiple challenges arising out of emissions, climate change, energy security and safety. It plans to achieve its target by increasing competitiveness between the local rivals and put in efforts to bring in more eco-friendly products. The automotive industry has a highly cyclic demand and looking at the current global and national economic scenario it is in for some tough times. Also with high inflation and increasing presence of global heavy weights in the local market, the Indian Automotive Industry is in for its biggest test till date. Also attention must be focused on using technology to built more fuel efficient cars, hybrid cars, cars with lower CO2 emission. Companies will need to maintain a balance with their investments in technology and profits in order to have a sustainable growth and also look to expand to global markets. On the global scale the global recession reset the automotive industry landscape. As the industry recovers, automotive companies across the value chain must focus on:

profitable and sustainable growth financial and operational flexibility investments in new technologies seizing opportunities in high-growth markets The rise of emerging markets gives the automotive industry a new business prospective. Challenges and opportunities exist in a growing middle class, evolving government regulations and increasing competition. The growing interest in alternative power technologies, especially the increased electrification of vehicles, existing vehicle manufacturers (VMs) are adding alternatively powered vehicles to their product line-ups, such as plug-in hybrids and pure electric vehicles, while new market entrants are using transformation of mobility drivers as their door into the automotive industry. Indian Farm Equipment Industry: World demand for agricultural equipment is expected to increase 6.7 percent per year through 2016 to $173.5 billion. Growth will be driven primarily by sales gains in rapidly developing nations -- particularly China, Brazil, and India -- as these countries continue to mechanize their agricultural sectors and make it more effective to stay in pace with the increase population and economic growth. On the Indian front easy availability of institutional finance, declining interest rates due to the priority lending status given by the government coupled with growing capital expenditure by the government for creating and improving agriculture infrastructure, successful implementation of the National Rural Employment Guarantee Act would all drive growth. Companies need to ensure that they stay in pace with the increasing demands of the economy

to maintain and increase the growth rate and also add value to their products by making new innovations.

2. PEST Analysis: Political, economic, social and technical aspects related to the industry Political factors: The automotive and farm equipment industry is closely linked with the policies of the government and hence we see both the industries dominated by players with political powers all over the world. The automotive industry depends on various regulations imposed by the government like emission of co2 limit, or how the Indian government allowing 100% investment of foreign equity hassled to increase in competition and brought in development in infrastructure in technology. The governments investment on infrastructure like roads and bridges affects the automobile sales. Also the governments import/export regulations play an important role for the globalisation of the companies. while the policies of the government in agriculture sector is vital to the farm equipment industry. The policies of the Indian government have mostly been conducive to growth of both automotive and farm equipment industry. Economical factors: Both the automotive and farm equipment (related to agricultural industry) industries play an important role in the countrys economic progress and also their progress is dependent on the progress of the economy. Recent economic conditions have lea to flat-demand of automobiles all over the world although the farm equipment industry continues to grow. With the countrys GDP growth being projected around 6.5-7.5 % it will be challenge for the automotive industry to maintain its growth of 8-10 % over the previous years and even more difficult to add on it. Also the growth the manufacturing industry (steel, plastic, glass) depends on these industries growth. Slow growth would result in wastage to economic resources. Social Factors: Automotive industry plays an important role in the employment levels of the country as it is responsible for employment of millions directly and indirectly. Also it leads to increase in standard of living of the people as having a bike or car is associated with the social status of families. The Indian customers are well informed and price sensitive with preference given to low cost and fuel efficient cars. Around half of the countrys population is involved in agricultural activities and hence it is important for the farm equipment industry to add value to their activities. Environment factors like increase in pollution and global warming also have an impact on the two industries. Technological Factors: Innovation being one of the main criteria of growth in both the industries, technology plays a very important role indeed. Hence, we see millions being spent on finding new technologies by many companies to ensure progress. Also the entry of many foreign competitors like BMW have lead to exposure for customers to new level of technologically developed cars leading to pressure on the local players to stay in tune with the technological developments.

3. Competitor Analysis: Here we take a look at Tata Motors the nearest competitor of Mahindra & Mahindra Ltd in the automotive industry. M&M, which is a leader in the utility vehicles and SUV space, has been growing rapidly over recent times. M&M has moved to the third position in the Indian passenger vehicle market, riding on higher demand for its vehicles, including the newly launched XUV500 SUV and thus taking over Tata Motors spot. Maruti Suzuki remains the market leader, followed by Hyundai. Sales: According to company figures, M&M sold 61,504 units during April-June 2012, with sales growing 28%. In contrast, Tata Motors' sales slipped 7% to 60,405 units in the same period. Out of the first three months of the current fiscal, sales of Tata Motors have fallen in two months (April and June), and single-digit growth was witnessed in May. This contrast can be attributed to the fact the Tata Nano failed to make an impact on the market as it was expected to do. Other hatchbacks like Tata Indica range have showed little growth but the demand has stayed fairly flat. While the sales of the sedan cars like the Indigo family have lowered. And that of the MUV/SUV like Sumo, Safari, Aria have also been flat. Although on the positive side Tata Motors is still leading the mini truck market with its model Tata Ace. Quality: In recent times Tata motors have lost a certain amount of credibility in terms of providing high quality PVs with instances of fires in Tata Nano after its launch. But Tata Motors plan to change that image with the recent acquisition of two iconic brands Jaguar and Land Rover in 2008. Improvement in the worlds cheapest car i.e. Tata Nano are hoped to bring in increase in sales volumes. Pricing: Both companies have their models in various price range to compete with each other. Example: 1. Tata Aria v/s Xuv 500 (10-15 lakhs) 2. Mahindra Verito v/s Tata Indigo CS (4-6lacs) It would be difficult to say whether one company has an advantage over the other in terms of pricing due to the number of variants available in the market for different models of both companies. Partnership, JVs, Alliances: Tata Motors is also expanding its international footprint, established through exports since 1961. The company's commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia, CIS, Russia and South America. It has franchisee/joint venture assembly operations in Bangladesh, Ukraine, and Senegal. Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand, Spain and South Africa. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the company's pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the Xenon having been launched in Thailand in 2008. Tata Motors (SA) (Proprietary) Ltd.

When we consider the farm equipment industry M&M is leading its competitors by a large margin having 42 % market share in the fiscal year 2011 and thus not having nearby competitors as such more so after acquiring majority shares one of its rival Punjab Tractors Ltd.

4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the industry Strengths Weakness Indian automobile industry is sai to be The industry is open to cyclical th the 9 largest in the world and has a downturns in demand. huge local market. The cost of production is ever increasing and with new models India has an abundance of cheap and skilful labour thus giving it a labour coming every month, the old models cost advantage. become obsolete leading to waste of time and money. The Government is supportive of investments in technology and Low research has led to dependency manufacturing units. on global players for development. Growing economy has helped in keeping the growth of the industry sustainable Also in a global market it is cost competitive Diversified needs of customers Opportunities Threats Commercial vehicles sector has Price sensitive customers. tremendous potential due to increase Small players finding it difficult to in infrastructural activity. keep pace with global competitors Rising rural demand needs to be Highly competitive market. tapped properly. Inflation is a huge concern. .Exports should be increased by diversification.

Company Analysis: 1. Company description Mahindra & Mahindra Ltd. is the flagship company of the Mahindra group having presence in the Aerospace, Agribusiness, Automobile, Components, Defense, Energy, Farm Equipment and Logistics industries. The company enjoys a leadership position in the global Tractor industry and the Indian Utility Vehicles market. Through its subsidiaries, the company has participates in the Aftermarket, Consulting, Financial Services, Industrial Equipment, Information Technology, Leisure & Hospitality, Real Estate and Retail industries. In 1947, Mahindra & Mahindra introduced India to the utility vehicle. More than 65 years later, they are still India's premier utility vehicle (UV) company, and have also grown quite a bit. In addition to making groundbreaking UVs like the Scorpio and Bolero, Mahindra offers cars, pickups, and commercial vehicles that are rugged, reliable, environmentally friendly, and fuel-efficient. Their global presence means you can find Mahindra vehicles on the roadsboth paved and unpavedof Australia, Europe, Latin America, Malaysia, South Korea, and South Africa. And they are seeking out new terrain every day. Mahindra is also involved in the construction of excellent components, provision of spares, and commitment to superior service. Their automotive businesses cover all transportation needs thanks to strategic synergies between our expertise in design, manufacture, and service.

2. General information about the company: The company was founded in 1945 Ludhiana as Mahindra & Mohammed by brothers K.C. Mahindra and J.C. Mahindra and Malik Ghulam Mohammed. After India gained independence and Pakistan was formed, Mohammed emigrated to Pakistan where he became the nation's first finance minister. The company changed its name to Mahindra & Mahindra in 1948.It started as steel trading company and entered manufacturing in 1947. Over the years they have diversified their business into various sectors and growing into a US $15.4 billion multinational group with more than 144,000 employees in over 100 countries across the globe with its head quaters located in Mumbai, Maharashtra. This year Mahindra Group has embraced a new brand position Mahindra Rise with an aim to energise and bind together their diversified federation of companies. Internally they follow three basic tenetsaccepting no limits, thinking alternatively, and driving positive change built around the core idea that if people are given the opportunity they need then they will succeed. The values which the company strives to adhere too are: Good corporate citizenship Professionalism Customer first Quality focus Dignity of the individual MANAGEMENT: Name A K Nanda A S Ganguly Designation Director Director

Anand G Mahindra Anand G Mahindra Anita Arjundas Anoop Mathur Anupam Puri Bharat Doshi Bharat Doshi Bishwambhar Mishra Deepak S Parekh Hemant Luthra Keshub Mahindra M M Murugappan Nadir B Godrej Narayan Shankar Narayan Shankar Narayanan Vaghul Pawan Goenka Pravin Shah R K Kulkarni Rajan Wadhera Rajeev Dubey Rajesh Jejurikar Romesh Kaul Ruzbeh Irani Shriprakash Shukla Uday Y Phadke Ulhas N Yargop V S Parthasarathy Vikram Singh Mehta

CEO Vice Chairman & Mng.Director CEO Real Estate Sector President (Two-Wheeler Sector) Director Group Chief Financial Officer Executive Director Chief Executive - Tractor & Farm Mechanization Director President (Systems & Technologies Sector) Chairman / Chair Person Director Director Company Secretary & Compliance Officer Secretary Director President (Auto. & Farm Equipment Sectors) Chief Executive - International Operations Director Chief Executive President (Group HR & After-Market) Chief Executive - Automotive Division Global Chief Executive Officer Exe. VP - Corp. Strategy & Chief Brand Officer President-Special Group Projects President (Finance, Legal & Fin. Services Sector) President-Information Tech. Sector, Group CTO Group CIO, Exe. Vice President - Finance & M&A Additional Director

Vishakha N Desai Zhooben Bhiwandiwala

Additional Director Executive Vice President

*Keshub Mahindra (Non-Executive Chairman of the board) has resigned making Anand Mahindra the new Executive Chairman of the Board effective from 8th August 2012. Leadership: Keshub Mahindra is a graduate from Wharton, University of Pennsylvania, USA. He joined the company in 1947 and became the chairman in 1963. During his long career he has held many key positions, served on the Board of Directors of several organizations, and been a member of many organizations and committees. He has also held many other important positions, such as Chairman of Bombay Chamber of Commerce and Industry (196667), President of ASSOCHAM (196970), Chairman of the Indian Institute of Management, Ahmedabad (197585); Member of the Foundation Board International Management Institute, Geneva (198489); Chairman, India Nominating Committee 'Single Nation Programme', Eisenhower Exchange Fellowships, USA (1998 2005). Anand Mahindra is Vice Chairman and Managing Director of Mahindra & Mahindra. He graduated magna cum laude from Harvard University and earned his MBA from Harvard Business School in 1981. He joined the Mahindra Group in 1981 as an Executive Assistant to the Finance Director of the Mahindra Ugine Steel Company. His leadership has helped make Mahindra a global company and strong competitor since India's economic liberalization in 1991. Anand is a notable public figure with a considerable following on Twitter and serves on many boards and committees.

Share holding pattern (BSE: 500520) Share holding pattern as on: 30/06/2012 Face value 5.00 No. Of Shares

31/03/2012 5.00 % Holding 25.14 0.12 25.26 No. Of Shares

31/12/2011 5.00 % Holding

Indian Promoters Foreign Promoters Sub total

% No. Of Holding Shares Promoter's holding 155523262 25.33 154374167 731772 0.12 731772 156255034 25.45 155105939 Non promoter's holding Institutional investors 107632832 17.53

154824006 25.22 731772 0.12 155555778 25.34

Banks Fin. Inst. and Insurance FII's Sub total Private Corporate

108853061 17.73

104402738 17.00 161483160 26.30 285693065 46.53 62570789 10.19

169316448 27.58 162573443 26.48 291465813 47.47 289385891 47.13 Other investors 54742095 8.92 58548990 9.54

No. Of Shares Bodies NRI's/OCB's/Foreign Others GDR/ADR Govt Others Sub total General public Grand total 23165914 35245088 487222 1657061 115296408 50962529 613979784

% Holding 3.77 5.74 0.08 0.27 18.78 8.30 100.00

No. Of Shares 23307820 34293405 450124 1202671 117802038 51679999 613973867

% Holding 3.80 5.59 0.07 0.20 19.19 8.42 100.00

No. Of Shares 23214321 35339610 451324 1142596 122717668 50007356 613973867

% Holding 3.78 5.76 0.07 0.19 19.99 8.14 100.00

3. Financial performance of the company: Sales: (figs in RS crores) Mar'12 12 Months Income Sales Turnover Excise Duty NET SALES Profit: Profit and Loss for the Year Reported PAT 34,353.63 2,518.43 31,835.20 2,710.86 2,878.89 25,569.55 2,092.02 23,477.53 2,498.33 2,662.10 20,323.63 1,807.30 18,516.33 2,048.16 2,087.75 14,668.13 1,587.05 13,081.08 965.21 836.7 Mar'11 12 Months Mar'10 12 Months Mar'09 12 Months

Source: http://economictimes.indiatimes.com/mahindra-&-mahindraltd/profitandlose/companyid-11898.cms Segment wise performance: Net Revenue in 2011= Rs 36,847.25 1. Automotive= 40.4 % 2. Farm Equipment= 29.4% 3. Systech= 9.4% 4. I.T services= 6.9% 5. Financial Services= 5.5%

6. Infrastructure= 1.6% 7. Hospitality= 1.4% 8. Others= 5.1% PBIT, before exceptional items in 2011= Rs 4,802.58 1. Automotive= 33.9% 2. Farm Equipment= 35.4% 3. Systech= 2.1% 4. I.T services= 2.2% 5. Financial Services= 15.5% 6. Infrastructure= 3.6% 7. Hospitality= 2.2% 8. Others= 1.9% The current credit ratings of the company from various Indian rating agencies are : Agency Short-term Long-term CRISIL (a S&P subsidiary) P1 + AA + Stable ICRA A1 + AA + Stable CARE PR1 + AA +

4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the company

Strengths M&M is a strong brand in the automotive industry Constantly brings new products according to market requirements like XUV500 to keep in pace with the needs of the customers Known for producing quality and economical products Large market share in farm equipment industry Has out-performed the Indian automotive industry in past few years Opportunities Expand overseas through various alliances Growth in rural economy should be tapped through increase in sale of tractors Introducing new innovation like hybrid cars etc

Weakness Still way behind Maruti Suzuki, Hyundai in PVs sector Dependent on growth of economy Not know for having luxurious cars instead known for having sturdy cars Dependence on government policies Failed partnership with Renault (LOGAN)

Threats The ever increasing fuel prices and overall inflation could slowdown sales Global competitors getting ahead in technology Diversification in various sector can lead to losing focus from core

business Highly competitive automotive industry Ever changing cutomer preferences

5. Strategies: Change in leadership: Mahindra And Mahindra Ltd announced that Mr. Keshub Mahindra, Chairman of the Company, to step down from his Chairmanship after a long and eventful innings of 64 years of service of which 48 years were as Chairman. Mr. Anand Mahindra has been appointed as Chairman of the Company and would be re-designated as Chairman and Managing Director. Social Efforts: M&M have carried out many Employee social programmes and partner with many NGOs
across India to improve local economies, health, and education and to provide sustainability to the community something they have promised to strive for, for example:

Akanksha Foundation Anandwan Amarjyoti Charitable Trust Ankur Society for Alternative in Education Army Navy Air Force Wives Activity Trust Aseema Charitable Trust Association of People with Disability Centre for Learning Resources

It has many foundations and initiatives harness thousands of employee volunteer hours and put millions of our own dollars to work expanding opportunities for disadvantaged groups. For example: K.C Mahindra Education Trust Mahindra Foundation Mahindra Education Society Tech Mahindra Foundation Mahindra Satyam Foundation

Over the years M&M have tried to expand their business in global markets: 1. Mahindra And Mahindra Ltd (M&M) is planning growth in China by aiming to create a single face for brand Mahindra in that country. M&M is proposing to integrate sales and marketing, manufacturing operations and supply chain of its two different joint venture

2.

3. 4.

5. 6. 7.

(JV) companies in China namely Mahindra China Tractors Limited and Mahindra Yeuda Yancheng Tractors Company Limited (MYYTCL) in order to synergies the business there. Mahindra And Mahindra Ltd could tie up with Kenya's Simba Corp. to sell its utility vehicles and pickup trucks in the African nation. And also plans to set up plants in African region. Mahindra And Mahindra Ltd may be considering a bid for Hawker Beechcraft; the bankrupt aircraft maker. Mahindra & Mahindra Limited completed acquisition of South Korean company Ssanyong Motor plans to develop vehicle platforms jointly with its South Korean unit Ssangyong Motor Co., Ltd., the first of which is expected to be ready in three to four years and also launch Ssangyong SUVs in Indian market. M&M also has a controlling stake in Reva Electric Car Company in Europe. M&M also plans to tap in the growing Brazilian automotive industry. M&M entered Ecuador market with the launch of Mahindra Vehicles.

M&M also plans to expand in the local market: 1. Mahindra & Mahindra Limited plans to launch eight new vehicles in the current fiscal year that started on April 1, according to its automotive president Pawan Goenka which has already started with the launch of XUV500 which has recorded large number of bookings. 2. Mahindra & Mahindra Limited and Telephonics Corporation, a subsidiary of Griffon Corporation, have announced the signing of a Joint Venture (JV) to provide the Indian Ministry of Defence (MOD) and the Indian civil sector with radar and surveillance systems, Identification Friend or Foe (IFF) devices and communication systems. 3. M&M have entered the two wheeler segment by taking over Kinetic Motors. 4. They are also expanding in other sectors like through acquisition by Tech-Mahindra of Satyam Computer Services have expanded its portfolio in IT sector which supported the 2010 FIFA World Cupthe worlds biggest sporting event. 5. Mahindra First Choice Wheels inaugurates authorized dealerships in Kolkata & Delhi. 6. New Bolero Maxi Truck is launched as the latest offerings in pick-up segment. 7. It has launched CNG version of Maxximo at 3.99 lac to compete with Tata ACE. 8. Mahindra two wheelers inaugurated future ready Research and Development facility in Pune to mke sustainable and eco-friendly two wheelers and also launched Duro DZ in January.