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Confidential

Updated 14th August 2012

MAHINDRA DEFENSE DEFENSE CASELET #1 of 1 The Defense Sector of the Mahindra Group spearheads their foray into Defense solutions offered to Governments and Security Organizations. BACKGROUND: The Mahindra Group has been involved with Defense Systems since 1947 when they imported, assembled and then adapted the iconic Willys Jeeps used in World War II. The business subsequently evolved into designing and constructing a line of armored vehicles and becoming the largest private sector supplier to the government. Currently, the business has expanded into three specific areas, i.e., Land Systems to include armoured vehicle, artillery guns, to name a few, Naval Systems with focus on under water weapons and defence electronics like radars, surveillance systems, communication, etc. Defense Systems like sea mines, surveillance solutions, weapons, ammunitions and more. As India improves her national security capabilities, Mahindra stands at the forefront of the opportunity to provide cutting edge technologies with experience and care. The expertise, manufacturing strengths, and costefficient production also make Mahindra Defense products useful to foreign governments and security organizations - the Defense business partners with several countries to bring them a range of defense solutions for use by the three armed forces, state police and central paramilitary forces. DELIVERABLES: This business has only one customer - the government. The environment the manner in which the government conducts business becomes very important. Uncertainties in the way government handles important decisions, coalition politics, reforms not being carried through and so on lead to a huge gap between intention and implementation. This looming uncertainty impacts the Defense business in a big way as far as planning is concerned. On one hand, there are no perceived shortages of funds available for defense. There are budgets for many types of programs but implementation has become a big issue due to a lack of transparency in government decision making. How should Mahindra Defense innovatively change the business model to keep up with the uncertainties that are likely to continue to exist in the medium term? The other area is technology. Most of the energies of the Defense business are focused on sustainable innovation - quality, timelines and profitability improvements - the philosophy of Do things better incrementally. That is very important, but there is going to be a balance in

Mahindra War Room 2012

Defense Sector Caselet

Confidential

Updated 14th August 2012

how much we need to put in to ensure that this business can be sustainable in the future in the face of disruptive innovation. Among businesses, it is the Defense business which may be the hardest hit by disruptive technologies. For example, unmanned autonomous systems, without the need for a human being may completely be the norm in a decade from now, making many suppliers irrelevant. Or, a bid today for a USD 12 billion Infantry Combat Vehicle program scheduled for delivery in 2018 may be completely disrupted by technologies in unmanned ground vehicles, thereby posing a serious challenge to the business. Or movements in materials technologies may completely change the way vehicle armoring is done. Steel was concentrated on for armoring, but composite materials came up and totally changed the way armoring is done. Telecommunications, network centric warfare systems, steam ships that eliminated the need for sailing ships, Nanotechnology and Nanosystems, UAVs, UCAVs that eliminated the need for keeping an airbase - all are examples of disruptive technologies in Defense that have the potential to turn businesses upside down. In this backdrop, evolve a plan for the business that addresses the following Strategic Questions: Which are the major disruptive technologies to hit the Defense Business in the coming years and how will it impact the business? What effort should Mahindra put to develop those Disruptive Technologies? How much should Mahindra balance the P&L and investments to prepare for or even cause disruptions in the Defense business? How much can we balance Profit & Loss and investments to prepare for the disruptions that may come in? Which are the 3 or 4 technologies that we should be looking at, that fits with the business plan over the next 10 years? What should we actually do to ensure that we are ready 10 years down the line? What sort of overseas acquisitions should we be looking at, if any? How to incubate these technologies? How much investment do we need to put down for something that may or may not happen 15 years down the line? How to balance between sustaining and disruptive innovations?

Mahindra War Room 2012

Defense Sector Caselet