Auto companies like Tata Motors, Mahindra & Mahindra, Ashok Leyland and Bajaj Auto have given a new outlook to the Indian automobile market. Undeniably, these auto companies have flourished in India and have also succeeded in making a global presence. Keep aside the competition, the cumulative efforts of these companies have put India on a global front when it comes to automobiles. Notably, these four major car companies have spent a cumulative figure amounting to Rs. 14,000 crore while making nine global acquisitions. Notably, now, these Indian auto companies are reaping the rich reward in the form of profits and dividends on these global acquisitions. This essentially marks the successful completion of the first lap as these companies are now ready to turn on the throttle to rev up the second lap. Also, as speculations are, if these auto companies are able to complete the second lap successfully, then one can see the birth of a new breed of multinationals that will seamlessly give customers exceptional flexibilities in terms of best deals, combining together the best of both worlds.
Talking about acquisitions, Mahindra & Mahindra had acquired SsangYong for Rs. 2,100 crore in 2011. Recently, in August 2013, the auto company, at the time of reporting its financial results for the April-June quarter, got a good news from South Korea, where headquarters of SsangYong is based. Incidentally, SsangYong marched ahead with a net profit of 6.2 billion won (Rs. 36 crore). Its first profit in the last six years (excluding extra-ordinary items). On same lines, few months back, Bajaj Auto had received a Rs. 27 crore dividend cheque from Austrian bike maker KTM. Notably, Bajaj Auto, earlier, had invested Rs. 1,200 crore in the bike maker company. Still more, everyone is acquainted with the Tata Motor's success that it has recorded post the Jaguar-Land Rover acquisition.
Initially, during the first lap, most global acquisitions did see a loss to mark such ambitious onsets. However, the second lap can be seen as highly prospective in terms of renewals. The existing and upcoming product range of these Indian auto companies are likely to be most benefited owning to advance technologies coming from such acquired companies and joint ventures.
Mahindra & Mahindra and SsangYong are busy in creating a new range of sports utility vehicles that will be launched in India and Korea. Through a partnership in the development of vehicles, the two companies will be able to regain development costs faster by selling more vehicles than one. The same thing holds true for Tata Motors and Jaguar-Land Rover while Bajaj Auto's Pulsar is already getting rewired through use of KTM technology. At present, 30 per cent of KTM bikes that are sold globally see their production in India and as speculations are this number might well go up over 50 per cent in future.
The mutual benefit of companies with their joint-ventures and acquired partners is pretty evident from Bajaj Auto's perception. Rajiv Bajaj, Managing Director of Bajaj Auto, reportedly said, “There is a lot of openness and an eagerness to watch each other's back, whatever happens. What is good for Bajaj Auto is good for KTM.” Stefan Pierer, Chief Executive Officer of KTM, Europe's second-largest motorbike maker, too hinted the same thing when he said, “We needed a strong back-up. And Rajiv Bajaj proved to be a great support.”
