Mahindra & Mahindra have raised their investments forecast for the next three years by 20%. The SUV manufacturer is expecting the current auto industry slowdown to end soon and according to the brand the growth will return to the market in the coming months.
The company has planned to invest INR 18,000 crore during the fiscal 2020-22 period, which was previously INR 15,000 crore. Mahindra targets towards capacity expansion by adding new products to both its farms and automotive portfolios to make an investment in the areas where there are opportunities.
The group chief financial officer VS Parthasarthy said: “To plan for the short term, say one quarter, is always very difficult. However, when there is 7% growth in GDP expected, it calls about a certain amount of investment.”
The company recently declared its fourth-quarter results, and also predicted better growth in both passenger and commercial vehicle segments than the forecast of 3-5% and 10-12%, respectively, by the Society of Indian Automobile Manufacturers (SIAM) for fiscal 2020. Mahindra estimates the tractor industry to grow 5% in the current fiscal year.
The Managing director of the company, Mr Pawan Goenka told ET: “Others may review their investment, but at least Mahindra is not slowing down. We are, in fact, increasing our CapEx and investment by 20% over a three-year cycle. We have not slowed down on our product development, we are working as aggressively as we have in the past on new product launches.”
This year Mahindra’s automotive design is focused on a transformation to BS VI emission standards, which is going to be introduced next year in April. A new C-segment SUV will be manufactured at the Chakan plant, which will also be produced with a different name for Ford, with which M&M has a product-sharing agreement. The company also said that they are adding a new press line and a paint factory that would be capable to handle 3 lakh units a year.
Apart from the SUVs, the company is also known for making tractors and the brand has decided to introduce a new manufacturing line for the same. The MD of the company also said that the investment in product development on tractors in the next three years would be more than the investment the company made in over the past five years.