Aerospace Business Caselet 1 of 1
Content
Confidential
Updated 23rd August 2012
MAHINDRA SYSTECH SECTOR CASELET AEROSPACE BUSINESS CASELET #1 of 1 Mahindra Systech Sector spearheads Mahindra Group’s foray into the Aerospace and Automotive Component Business. The sector comprises a constellation of automotive component manufacturing & marketing companies (such as Gears, Forgings etc., coupled with the inorganic foray into the Aerospace segment). Mahindra Aerospace is the aircraft and aero-structure manufacturing division of Mahindra Systech, and a new global player in the delivery of aircraft, aero-structures and aircraft development services. With its acquisition of two Australia-based aviation companies, Aerostaff Australia – producer of aerospace components for the world’s OEMs – and GippsAero – producer of the Airvan family of utility aircraft – Mahindra Aerospace has laid the foundations towards achieving its aspirations of becoming a significant global company across aerospace components, assemblies and aircrafts. BACKGROUND: In 2006 Mahindra Engineering Services, a part of Mahindra Systech providing outsourced design services to automotive firms, acquired Plexion Technologies, a boutique firm specializing in aerospace design, to diversify its service portfolio. There were other benefits to this purchase: first, Plexion had partnered Australia’s Seabird Aviation that had a prototype 2 seater aircraft and was looking for an Asian ally. Second and more important, Plexion had an agreement with the National Aeronautics Laboratory (NAL) to develop a 5-seater aircraft for the private sector. Christened the NM5 (NAL + Mahindra + 5-seater), the Mahindra team decided to help speed up the NM5 project. However, success can’t be measured with the production of just one aircraft model and Mahindra needed to increase its footprint in the global general aviation business - defined as aircrafts with less than 20 seats. Having done their due diligence, Mahindra zeroed on a highly successful yet small Australian company in 2009. GippsAero has a history of more than 20 years and they have designed and manufactured general aviation aircrafts, less than 20 seaters, which have been sold in more than 30 countries with FAR 23 certification that signifies the highest level of safety. Thus, the Mahindra Group made an entry into the aerospace business and GippsAero became a subsidiary of Mahindra Aerospace Ltd. It was an attractive business proposition for both. With global general aviation set to grow, the GippsAero acquisition gave the Mahindra’s access to a company with solid technical prowess. GippsAero has a best-selling 8-seater aircraft Airvan and has plans for a 10 and 14 seater. These
Mahindra War Room 2012
Aerospace Business Caselet #1 of 1
Confidential
Updated 23rd August 2012
aircrafts along with the NM5 ensures that Mahindra Aerospace product portfolio will cover the entire spectrum of the general aviation space. The USP of these planes is that they can land and take off from unpaved fields– short or long, planes that can be used for disaster relief, pilgrimage , corporate travel. The costs per seat kilometer of these machines approach road transport and are half that of larger aircrafts which use jet engines instead of turbo prop and piston engines used in general aviation aircrafts. Additionally, with the helping hand of GippsAero, NM5 has made its first test flight and will soon be certified in Australia enabling it to become the first aircraft to be designed and manufactured by the Indian private sector. For GippsAero, the Mahindra name and backing catapulted them to the global league. It allowed them access to larger and more established markets, and more important access to funding in this very trust based business. Indian government regulations require global players entering India (for aerospace and defense projects) to offset and partner with domestic players. Soon, inquiries kept coming in not just for aviation design but also for components delivery for engineering services, general aviation, and the defense sector. Mahindra realized that they needed a strong component-making division. GippsAero worked with a local Australian supplier – Aerostaff Australia, a Melbourne-based manufacturer of precision sheet metal parts and assemblies for aerospace and defense industries. By acquiring this boutique firm, Mahindra strategically entered into the aerospace components market. Soon, plans were afoot to build a comprehensive aero-structures manufacturing capabilities in India. Both Aerostaff and the India plant are subsidiaries of Mahindra Aerospace. For GippsAero, becoming a Mahindra subsidiary now allows them to fulfill a long ambition of being able to enter the lucrative U.S. general aviation market. In late February 2012, they announced the appointment of Flightline Group, Inc. as their authorized dealer for the southeastern U.S. It allows them to now market their successful GA8 Airvan across 9 U.S. states and tap into Flighline’s sales and customer support for piston-powered, turbo-propelled and turbojet powered personal and business aircraft.
Mahindra War Room 2012
Aerospace Business Caselet #1 of 1
Confidential
Updated 23rd August 2012
DELIVERABLES: With this background, support the Systech sector in the following areas: Develop a comprehensive strategy to build Mahindra Aerospace as a brand. The aircraft product is the safety product of the highest kind, and there is enormous trust involved in the purchase of an aircraft. Currently, Mahindra Aerospace is the name of the holding company, while GippsAero is used as the aircraft brand, and the aircraft models are named GA8, GA10 and so on. Aerostaff Australia makes aerospace components. Guide the overall structure, brand architecture and nomenclature for this business, so that they connect with customers globally and not just in India. Assess the relevance of the Mahindra name in conveying trust in new markets such as USA and Europe. Considering that Mahindra aspires to be a Top 50 Global Brand, there may be a big push of consumer outreach or media activities - should that be leveraged or a name like GippsAero which is familiar as an aircraft brand be used? Or should there be a transitional strategy as Nissan had with Datsun and IBM had with Lenovo. Evolve a glide path to using the Mahindra brand name, should you think it is necessary. Study what Beechcraft, Cessna and Embraer have done in this area. Evolve strategies to convey trust, while studying what Cessna and others do towards the goal. Evolve a nomenclature like BMW, by which current and potential customers can immediately distinguish and get familiar with newer products over time. Develop an identity, creative strategy and collaterals, and lay out a marketing budget to build the brand globally, with strategies to capture market share, develop and communicate the value proposition and expand the dealer network. Develop a strategy to build the B2B business and gain volumes. Assess opportunities such as small fleet owners, city surveillance, skydiving shops, flying schools, medical evacuation, tourism and training; or envision these planes as rugged utility vehicles for the air, the jeep of the sky - not just in India, but include US, South Africa, China and Australia. Study the competition and evolve mechanisms to build the brand in competitive situations. Please treat this issue in adequate depth.
Mahindra War Room 2012
Aerospace Business Caselet #1 of 1
Updated 23rd August 2012
MAHINDRA SYSTECH SECTOR CASELET AEROSPACE BUSINESS CASELET #1 of 1 Mahindra Systech Sector spearheads Mahindra Group’s foray into the Aerospace and Automotive Component Business. The sector comprises a constellation of automotive component manufacturing & marketing companies (such as Gears, Forgings etc., coupled with the inorganic foray into the Aerospace segment). Mahindra Aerospace is the aircraft and aero-structure manufacturing division of Mahindra Systech, and a new global player in the delivery of aircraft, aero-structures and aircraft development services. With its acquisition of two Australia-based aviation companies, Aerostaff Australia – producer of aerospace components for the world’s OEMs – and GippsAero – producer of the Airvan family of utility aircraft – Mahindra Aerospace has laid the foundations towards achieving its aspirations of becoming a significant global company across aerospace components, assemblies and aircrafts. BACKGROUND: In 2006 Mahindra Engineering Services, a part of Mahindra Systech providing outsourced design services to automotive firms, acquired Plexion Technologies, a boutique firm specializing in aerospace design, to diversify its service portfolio. There were other benefits to this purchase: first, Plexion had partnered Australia’s Seabird Aviation that had a prototype 2 seater aircraft and was looking for an Asian ally. Second and more important, Plexion had an agreement with the National Aeronautics Laboratory (NAL) to develop a 5-seater aircraft for the private sector. Christened the NM5 (NAL + Mahindra + 5-seater), the Mahindra team decided to help speed up the NM5 project. However, success can’t be measured with the production of just one aircraft model and Mahindra needed to increase its footprint in the global general aviation business - defined as aircrafts with less than 20 seats. Having done their due diligence, Mahindra zeroed on a highly successful yet small Australian company in 2009. GippsAero has a history of more than 20 years and they have designed and manufactured general aviation aircrafts, less than 20 seaters, which have been sold in more than 30 countries with FAR 23 certification that signifies the highest level of safety. Thus, the Mahindra Group made an entry into the aerospace business and GippsAero became a subsidiary of Mahindra Aerospace Ltd. It was an attractive business proposition for both. With global general aviation set to grow, the GippsAero acquisition gave the Mahindra’s access to a company with solid technical prowess. GippsAero has a best-selling 8-seater aircraft Airvan and has plans for a 10 and 14 seater. These
Mahindra War Room 2012
Aerospace Business Caselet #1 of 1
Confidential
Updated 23rd August 2012
aircrafts along with the NM5 ensures that Mahindra Aerospace product portfolio will cover the entire spectrum of the general aviation space. The USP of these planes is that they can land and take off from unpaved fields– short or long, planes that can be used for disaster relief, pilgrimage , corporate travel. The costs per seat kilometer of these machines approach road transport and are half that of larger aircrafts which use jet engines instead of turbo prop and piston engines used in general aviation aircrafts. Additionally, with the helping hand of GippsAero, NM5 has made its first test flight and will soon be certified in Australia enabling it to become the first aircraft to be designed and manufactured by the Indian private sector. For GippsAero, the Mahindra name and backing catapulted them to the global league. It allowed them access to larger and more established markets, and more important access to funding in this very trust based business. Indian government regulations require global players entering India (for aerospace and defense projects) to offset and partner with domestic players. Soon, inquiries kept coming in not just for aviation design but also for components delivery for engineering services, general aviation, and the defense sector. Mahindra realized that they needed a strong component-making division. GippsAero worked with a local Australian supplier – Aerostaff Australia, a Melbourne-based manufacturer of precision sheet metal parts and assemblies for aerospace and defense industries. By acquiring this boutique firm, Mahindra strategically entered into the aerospace components market. Soon, plans were afoot to build a comprehensive aero-structures manufacturing capabilities in India. Both Aerostaff and the India plant are subsidiaries of Mahindra Aerospace. For GippsAero, becoming a Mahindra subsidiary now allows them to fulfill a long ambition of being able to enter the lucrative U.S. general aviation market. In late February 2012, they announced the appointment of Flightline Group, Inc. as their authorized dealer for the southeastern U.S. It allows them to now market their successful GA8 Airvan across 9 U.S. states and tap into Flighline’s sales and customer support for piston-powered, turbo-propelled and turbojet powered personal and business aircraft.
Mahindra War Room 2012
Aerospace Business Caselet #1 of 1
Confidential
Updated 23rd August 2012
DELIVERABLES: With this background, support the Systech sector in the following areas: Develop a comprehensive strategy to build Mahindra Aerospace as a brand. The aircraft product is the safety product of the highest kind, and there is enormous trust involved in the purchase of an aircraft. Currently, Mahindra Aerospace is the name of the holding company, while GippsAero is used as the aircraft brand, and the aircraft models are named GA8, GA10 and so on. Aerostaff Australia makes aerospace components. Guide the overall structure, brand architecture and nomenclature for this business, so that they connect with customers globally and not just in India. Assess the relevance of the Mahindra name in conveying trust in new markets such as USA and Europe. Considering that Mahindra aspires to be a Top 50 Global Brand, there may be a big push of consumer outreach or media activities - should that be leveraged or a name like GippsAero which is familiar as an aircraft brand be used? Or should there be a transitional strategy as Nissan had with Datsun and IBM had with Lenovo. Evolve a glide path to using the Mahindra brand name, should you think it is necessary. Study what Beechcraft, Cessna and Embraer have done in this area. Evolve strategies to convey trust, while studying what Cessna and others do towards the goal. Evolve a nomenclature like BMW, by which current and potential customers can immediately distinguish and get familiar with newer products over time. Develop an identity, creative strategy and collaterals, and lay out a marketing budget to build the brand globally, with strategies to capture market share, develop and communicate the value proposition and expand the dealer network. Develop a strategy to build the B2B business and gain volumes. Assess opportunities such as small fleet owners, city surveillance, skydiving shops, flying schools, medical evacuation, tourism and training; or envision these planes as rugged utility vehicles for the air, the jeep of the sky - not just in India, but include US, South Africa, China and Australia. Study the competition and evolve mechanisms to build the brand in competitive situations. Please treat this issue in adequate depth.
Mahindra War Room 2012
Aerospace Business Caselet #1 of 1
