Fact – almost 90 per cent of tractors sold in India are sold on credit. M&M sells ‘Swaraj’ brand of tractors.
When Mahindra & Mahindra (M&M) acquired Punjab Tractors Ltd (PTL) for RS 1,489 crore in March 2007, the latter was a pale outline of its former self. Why?
Chennai-based Tractor and Farm Equipment (TAFE ) bought Eicher Motors's tractor division, increasing its market share to 22%. This brought TAFE, whose earlier market share was just 14 per cent, within striking distance of M&M, whose share was 31 per cent. It presented a threat to M&M as TAFE can utilize its increased capacity (to produce) and economies of scale to further increase its market share and profits. So, Buying PTL was both a necessity to survive as well as an opportunity to increase its competency. First crucial step, after buyout
To commission an external agency to find out what was wrong with the company They interviewed its 300-odd employees, who spoke out freely and explicitly after getting an assurance of not being reprimanded. Problems:
1. PTL had neither a vision nor a long-term plan
2. Decision making was slow and invariably top down (bad culture started by top management) 3. Production was not market-linked (as earlier PTL used to be partially owned by government) 4. No major investments in product development had been made in recent year Solutions:
1. Sought a clear vision of the company's future (workshop comprising 60 employees across functions to debate and arrive at a vision) 2. A major thrust towards product development
3. Large scale training, skill development and better welfare measures for employee (canteen was refurbished, greater safety measures) 4. Overbearing labour union was tamed
5. Setting up a Swaraj Leadership Team consisting of CEO himself and all the other functional heads to take major decisions quickly 6. Collections from farmers were improved
7. A brand building exercise began with a flurry of...
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