Wednesday, March 31, 2010

M&M to foray into aviation

Anand Mahindra, India’s entrepreneur of the year, has set his sights on manufacturing passenger aircraft

People might recall that last September, Boeing said it expected the Asia Pacific region to be the world’s largest aviation market by 2028, with about $1.2 trillion being spent on almost 9000 new planes over the next 20 years. Boeing said that strong demand for single aisle planes in China and India meant that about 5600 of these would be single aisle models.

Mr Mahindra, VC and managing director of M&M said that India’s huge domestic market gave it a “tremendous home-base advantage” in building a scale business and that it was important for Indian business people to understand that it was the big domestic market “that allows us to become world-class players”.

Mr Mahindra is conscious that it is a step-by-step process, going from a GA8 Airvan to a 10-seater, then to an 18-seater Nomad and on to regional jet. To speed up the process, three months ago Mahindra agreed to pay about $40 million for a controlling stake in two small Australian aviation companies, Gippsland Aeronautics and Melbourne-based component maker Aerostaff Australia. 
While he recognised that it would take time, he joked that he hoped it will happen before he retired. He will be 55 next month. 

Allaying any fears pertaining to the quality of its product owing to its relative inexperience in the sector, Mr. Mahindra said, “Look, we’ll make a world-class product and we’ll go where the markets are. Arguably, the biggest aircraft markets in the world in the next two decades are going to be China and India anyway."

The Mahindra group’s businesses include financial services, automotive products, trade, retail and logistics, information technology and infrastructure development. It is one of the world’s biggest tractor makers, with plants in India, China and the United States, and an assembly site in Brisbane, Australia. In Australia, it also sells the Mahindra Pik-Up, a light utility.

The Mahindra family and associates hold a stake of about 13 per cent in the main group company, Mahindra & Mahindra, which has a market capitalisation of $7bn.

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