Mahindra War Room 2015
Mahindra Partners Division-Marine Business Caselet
MAHINDRA PARTNERS SECTOR:
MARINE BUSINESS CASELET
Mahindra Partners is the USD. 900 Million Private Equity and Venture Capital Division
of the Mahindra Group, which incubates new businesses with the mission to accelerate
value-creation through a diversified global portfolio of emerging businesses. The
Mahindra Partners Division’s portfolio spans across multiple industries namely Logistics,
Steel Processing, Renewable Energy, Conveyor Systems, Vocational Education, Retail,
Consulting Infrastructure projects, Luxury Boats and Media & Entertainment.
This caselet pertains to Mahindra Marine, the luxury and speedboat manufacturing
business.
BUSINESS BACKGROUND:
With firm roots in the land transportation business, Mahindra Group has evolved into a
leading “Mobility” solutions provider, offering means to transport in air and water too. In
2008, Mahindra Group set up the Mahindra Ocean Blue business, which has now been
renamed as Mahindra Marine, with a vision to build water crafts of international quality,
at Indian prices. The Mahindra Odyssea brand of luxury boats marked the first foray of a
corporate business house
into the specialised high
speed fibreglass reinforced
plastic (FRP) boat-building.
In 2009, 7m and 10m
speedboats were launched
at the India Boat Show to
critical acclaim. In 2012,
Mahindra built its own boat
building yard in Ambernath,
which manufactured and
launched the MO33 Cabin
and MO35 Diesel Variants of
Luxury Boats. In 2013, Mahindra delivered its first 14m patrol boat, to cater to India’s
growing Marine safety requirements.
In 2014, Mahindra launched the MO17 speedboat in the sub-15 Lac category - the first
of its kind. In 2015, Mahindra Marine is in the process of delivering a customised 16m
boat to the Government of Odisha.
Broadvision Perspectives Client Confidential
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Mahindra War Room 2015
Mahindra Partners Division-Marine Business Caselet
LIVE CHALLENGE:
Today, Mahindra Marine has acquired a wealth of experience in the under-developed
Luxury Boats business of India. The following points summarise the strengths,
challenges and opportunities faced by the business:
STRENGTHS:
1. Leading FRP boat building company – Mahindra Marine has more than 70% of
market share in this segment.
2. State-of-the-art boating yard – From mould-building to putting the final touches
on the boat, the facility at Ambernath is well-equipped and adds to the
competitiveness of Mahindra Marine.
3. The Ability to Customize – Mahindra Marine has the capability to customize
boats to cater to diverse needs, including product features such as stern drive
propulsion, shaft propulsion and simpler OBM fitment. The product range has a
diesel variant as well, to cater to local requirements and preference to diesel in
commercial applications.
4. ISO 9000:2008 and IRS certified – Mahindra Marine is ISO9000 and IRS
certified, offering added assurance of quality and safety of boats.
5. Experienced team – Naval architects, interior designers and a strong workforce
with expertise in the boating domain is the backbone of MMPL.
CHALLENGES
1. Infrastructure – Currently, there is just one marina in the country which is situated
in Kochi. Marinas are used to dock the boats, service them, refuel them and also
become a destination for other recreational activities. Plans for Marinas in Goa and
Mumbai have been under discussion, but have faced a lot of criticism, adding
uncertainty on the policy towards core infrastructure required for the business.
2. Financing options – Currently, banks do not extend Loans and EMI payment
facility for the purchase of Boats. Also, there is no market for used boats now, greatly
limiting the potential for business growth.
3. Professional Talent – Since this an emerging area, there is a need for trained
people supporting the different aspects of the business from architecture to
engineering, maintenance and operations.
4. Chartering services – The availability of cheap charter services ranging from Rs.
7,000 – Rs. 12,000 threatens the boat-building industry.
Broadvision Perspectives Client Confidential
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Mahindra War Room 2015
Mahindra Partners Division-Marine Business Caselet
OPPORTUNITIES
1. High Net Worth Individuals – India has more than 117,000 high net worth
individuals growing at an average rate of 20% every year, who are expected to aspire
for water and air bound activities.
2. Jal Marg Yojana – The objective of the Jal Marg Yojana is to convert India’s 101
rivers into national waterways to allow for water transport (cargo and leisure) as it is
considerably cheaper than rail or road transport. The Government has already
started work on the INR. 4,200 Crore project to develop a fairway between Allahabad
and Haldia. If this project succeeds, it is expected to lead to a flurry of activity in the
waterways, greatly benefiting Mahindra Marine.
3. Patrol boats - The second phase of the Coastal Security Scheme is being
implemented, with an outlay of INR. 1,580 crores over 5 years, with an expected
demand of 225 boats under this scheme itself. In 2013, India spent Rs. 1863 Crores
on acquiring equipment for the navy, which is another potential opportunity.
4. Ports – Currently, India has 12 major ports and 176 smaller ports. With the
Government securing INR. 20,700 Crore investment in port projects, India is on track
to double its port capacity to 3,200 million tons.
5. Water tourism - In March 2013, the Ministry of Tourism sanctioned INR. 47.6
crores to the Government of Kerala for the development of the back water circuit in
Alappuzha, as a mega circuit. Similar projects are also being financed across India.
6. Marinas - The Mumbai Maritime Board plans to develop the Versova beach into a
tourist spot and marina. The Government of Goa is also reviewing investment
proposals to build 2 marinas in Goa. Redevelopment of the port land in Mumbai is
also being considered which allows the building of a marina in Mumbai.
With this backdrop, how should Mahindra Marine lay down short-term and long-term
management goals? Which new and innovative revenue models can be pursued and
why? How can the luxury boats category be expanded significantly? What should be the
ideal go-to-market strategy? What technologies are lucrative to invest in? Are there any
opportunities for inorganic expansion in India or abroad?
Evolve a strategy for the Mahindra Marine business to achieve revenues of INR.
500 crores and to make ‘Odyssea’ be the most admired brand of Luxury Boats in
India.
Broadvision Perspectives Client Confidential
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