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Scorpio eyes foreign pastures

Mumbai, March 27: Mahindra and Mahindra (M&M), the Rs 5,500-crore Mumbai-based auto major, will set up joint ventures in a couple of CIS countries, Georgia and China for its premier sports utility vehicle — Scorpio.

A senior company executive said Scorpio has already generated huge interest in these countries and manufacturing bases are necessary to cater to local demands.

The company is already in talks with quite a few companies for partnership in its proposed joint ventures.

“The way things are moving, we are hopeful of setting up at least a couple of joint ventures in this calendar year,” he said.

In Georgia, the company is in talks with the Sun group of Khemkas, which is a leading name in the insurance sector.

“We are in advanced talks with the Sun group and the partnership will soon take a formal shape,” he said.

The joint venture in Georgia could be a 50:50 partnership.

The company is already exporting Scorpio in completely-knocked-down form in Georgia and some of the CIS countries to establish the brand.

“But it is very difficult to make inroads into these markets through exports because of the tariff and freight costs. Hence, setting up joint ventures is very important to grab sizeable market share there,” he said.

The executive further pointed out that the Chinese and African markets are opening up huge possibilities for the auto companies and M&M is trying to grab those.

“In China, we are talking to two to three players for a joint venture partner. The country has a huge potential especially for SUVs if the growth rate and population in China is anything to go by. We are trying our best to develop a strong manufacturing base in that country,” he said.

The executive added that is difficult to continue exports to China because of a very stiff tariff structure. However, if the vehicles are manufactured in China, the margin will be definitely lucrative, he said.

In the domestic market too, Scorpio, which was launched in June last year, has already surpassed the company’s target. The company plans to sell over 10,000 units of Scorpio by the year ending March 31.

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