AdvancedFinancialManagement

SectorAutomobile
GROUP12
VarunSubramanian53
VedikaKejriwal54
VidhiKedia55
YashHaldankar56
TopicchosenMergerbetweenVolkswagen
andPorsche
1

INDEX

CompanyProfile
SRNo
TOPIC

PageNo

CompanyProfile

Process

4,10

Issuesfaced

Afterissuesand
currentsituation

11

Innovation

19

Volkswagen
Withitscarsnamedafteranassortmentofclimatepatterns,insects,andsmall
mammals,Volkswagen(VW)isEuropesleadingcarmakerandsecondinthe
worldbyvehiclesales,afterToyota.AlongwiththeworldrenownedBeetleand
theGulfSteamreferencingGolf,VW'sgarageofcars,trucks,andvansincludes
modelssuchasPassat(namedafteratradewind),Jetta(jetstream),andFox.
VWownsagaragefullofluxurycarmakerswhichitgrantssignificant
autonomy:AUDI,Lamborghini,Porsche,Bentley,andBugatti.Otherowned
brandsincludeSpanishautomakerSEAT,Czechautomakerkoda,and
commercialvehiclemakersScaniaandMan.Thecompanymadeheadlinesin
2015whentheEnvironmentalProtectionAgencypubliclyannouncedthat11
millionofitsdieselcarscontainedsoftwareusedtocheatemissiontests.

Porsche
PorscheAutomobileHoldingSEisaGermanybasedholdingcompanyengaged
intheautomobilemanufactureindustry.TheCompanyisengagedinthe
holdingandmanagingofitsinvestmentsinVolkswagenAG,throughwhichthe
CompanymanagestwelvemotorbrandsfromsevenEuropeancountries:
VolkswagenPassengerCars,Audi,SEAT,Skoda,Bentley,Bugatti,
Lamborghini,Porsche,Ducati,VolkswagenCommercialVehicles,Scaniaand
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MAN.Inaddition,theCompanyisalsoactiveinpartsdistribution,aftersales
andinvestsintheautomotivevaluechain,thiscomprisesthespectrumofbasic
technologiesgearedtosupportingthedevelopmentandproductionprocess
throughtovehicleandmobilityrelatedservices.TheCompanyoperatesone
whollyownedsubsidiary,PorscheBeteiligungGmbH,andonemajorityowned
subsidiary,VolkswagenAG.

AcquisitionProcessofVolkswagenandPorsche.
1.

PorschechairmanWendelinWiedekingandhisdeputy,moneyman,and
chiefstrategistHolgerHrterhatchasecretplantotakecontrolofVolkswagen,
whichsellssixtytimesasmanycars.

2.

PorschebeginsbuyingupVWshares.Thepurchasesarefirstrevealedin
mid2005,whenPorscheshocksthefinancialworldwiththeannouncementthat
itplanstoacquiremorethan20percentoftheVWGroupandbecomethe
largestsingleshareholder.

3.

Bymid2006,Porschesstakereaches25percent,andbyMarch2007its
30percent.Butacompletetakeoverisnotourintention,saysWiedeking.
Instead,wewanttoprotectoneoftheworldsbiggestcarmakersfrom
corporateraidinglocusts.

4.

InOctober2008,sittingonafat,42.6percentblockofVWshares(and
withoptionstopurchaseanother31.5percent),Wiedekingfinallyadmitshis
intentionsforPorscheSEHoldingtotakeover75percentofVWsharesduring
thecourseof2009.

5.

AsPorschesbuyingpushesupVWsstockprice,Porschepurchases
optionstobuymoreshares,andthoseoptionszoominvalueasthestockprice
4

continuestoclimb.Profitsfromthesefinancialmanipulationssoonexceed
Porschesprofitsfromcarmaking,anunprecedentedeventinGermanbusiness
history.
6.

Reachingthe75percentthresholdwouldtriggertheominous
dominationandprofittransfercontract,thetrueessenceofthedeal.Atthat
point,PorschewouldhavetheabilitytocleanoutVWscoffersandreceivean
immediate8billion($11.4billion)cashbackonitspurchase.

Issuesfaced
1)Porsche,basedinStuttgart'ssuburbofZuffenhausen,acquiredanautomotive
groupwith14timesitssalesand60timesitsproductionvolume.Inaddition,
Porschesucceededinperformingaonetimefeatinthethefiscalyear2007.
ThankstodealsinvolvingVWoptions,thecompany'sprofitsexceededitssales.
Judgingbytheprofitfigures,thingsweregoingexceedinglywellforPorsche.
ButanothernumberwascausingproblemsforWiedekingandHrter:Porsche
wassaddledwith9billion($11.9billion)indebt.Thecompanyaccumulated
anadditional6billion($7.9billion)indebtinonlythefirstsixmonthsofthe
fiscalyear2008whenPorscheincreaseditsshareinVWto50.8percent.This
raisedthequestionofwhetherPorschemayhavebittenoffmorethanitcan
chewwiththeVWdeal.
Howcanthecompanypaytheestimated600million($790million)inannual
interestonitsloansifitsownautomobilesaleshaveplungedinthecurrent
economiccrisis?AndwhatifVWpaysnodividendoronlyasmalldividendin
thecomingyeartomajorityshareholderPorsche?HasPorschemadethesame
mistakewithVolkswagenasautomobilepartsmakerSchaefflerdidwhenit
acquiredtiremakerContinental?

Porscherakedinprofitsof10.5billion($13.7billion)onVWoptionsalonein
thetwofiscalyears.Thesefigurescreatedtheimpressionthat,thetakeoverof
theVWGroupwaspracticallyfinancingitself.
Butthefiguresonlyappearedbrieflyinthebalancesheetbeforedisappearing
againbecausePorschewasdeterminednottomakeitsmoneywithmarket
speculation.CFOHrterreinvestedthemoneytobuyVWstock,thepriceof
whichhadgoneupsharply.WhereasVWstockwastradingatlessthan40
($53)ashareatthebeginningofthetakeover,Porschewaslaterforcedtobuy
thestockatpricesinexcessof200($264)ashare.
Theprofitsontheoptionsdisappearedasquicklyastheyhadaccumulated.
Moreover,Porschehadtotakeoutaloanfor10billion($13billion)tobuythe
VWstock.Becauseofthatloanthecompany,longaccustomedtosuccess,was
suddenlyinhotwater.
2)PlayingPokerwiththeBanks
OnMarch24,10billionloanwasscheduledtoberefinanced,leadingtoa
dramaticgameofpoker.Thesupervisoryboard,whichconsistsprimarilyof
membersofthePorscheandPichfamiliesmetatthePorscheR&Dcenterin
Weissach,nearStuttgarttodiscusstheresultsofthefirstsixmonthsofthe
2008/09fiscalyearFerdinandPich,WolfgangPorscheandtheotherfamily
representativeswereexpectingamessagefromtheconferenceroomofa
Frankfurthotel,wherePorscheCFOHrterwasnegotiatingwithbank
representativesoverthe10billionloan.

DERSPIEGEL
Porsche'sLiquidity

Onlyayearearlier,aconsortiumoffivebanks,ledbyMerrillLynch,hadeasily
approvedtheloanatfavorabletermsforPorscheandwithoutlengthy
negotiations.Atthattime,thefinancialcrisishadnotyetbroughtthebanking

systemtothebrinkofcollapse.ButnowMerrillLynchisasubsidiaryofBank
ofAmerica,whichisnotshowingaparticularlystronginterestinthelending
businessinGermany.Otherbanksareeitherunwillingorunabletoissueloans
ofthemagnitudePorscherequires.Thattime,Hrterfoundhimselfnegotiating
theloan,notwithfive,butwith15banks.Andtheymadesurethatheandthe
entirePorschePichclankeptsweatinguntilthelastminute.
Thefamilymembershadalreadydiscussedemergencyplans.Whatwouldhave
happenedifthebanksdidnotrefinancetheloan?Porschewouldhavehadto
repay10billion.
Accordingtoacloseassociateofthefamily,thiswouldnothaveputthe
companyatriskforbankruptcy.BothPorscheandthefamilyclanhavebillions
inassets.Nevertheless,theywouldhavehadtoraiseagreatdealofmoneyvery
quickly.Optionsthatwereexploredincludedsellingsubsidiaries,suchas
PorscheEngineering,PorscheDesignorPorscheConsulting,toVW,butthis
wouldhaveraisedlegallysensitiveissues.ItwouldhavegivenotherVW
shareholdersoccasiontotakelegalstepsagainstsuchpurchasesbecausethey
couldbeinterpretedasafinancialbailoutformajorityshareholderPorsche.
PorschecouldalsoselltheoptionsonVWsharesitstillowns.Theyareworth
severalbillionseurosonpaperbecausethepriceoftheVWshareisstillhigh.In
practice,however,thesesharescanonlybesoldinsmallbundles.IfPorsche
weretoredeemalargernumberoftheoptionswiththebanks,thebankswould
sellVWsharesinreturn.ThiswouldcausethepriceofVWsharesandthe
valueoftheoptionstofall.
3)NoSimpleSolution
Anotheroptionthatwasconsideredwaswhetherthefamiliescouldbring
anothercompanytheyownintoPorscheAutomobilHolding:Europe'slargest
autodealer,whichisheadquarteredinSalzburg,Austria,andboastsannual
salesofjustunder13billion($17billion).ThiswouldincreasePorsche
Holding'sequitycapital,butitwouldnotsolveitscashflowproblems.
Therewasnosimplesolution.ThePorscheandPichfamilieswereconvinced
thatthebankswerenotfundamentallyagainstissuinganewloanbutwere
merelydelayingaslongaspossibletonegotiatethehighestpossiblerates.
Nevertheless,thefamilieswereforcedtoaccommodatethebanksmorethan
theyhadwantedto.First,theyhadtosatisfythebanks'requirementthatPorsche
pledgeitsVWsharesinreturnforanewloan.Onlyafterhemadethatpromise
wasCFOHrterabletoreportfromFrankfurtthatthebankshadgiventheir
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approvalfor8.5billion($11.2billion).Thenegotiationsfortheremaining1.5
billion($2billion)continueduntilshortlybeforemidnight.
Butthatdidnotsolvetheproblem.Porschereceivedthenewloanunderthe
conditionthatitwouldrepay3.3billion($4.4billion)ofitwithinhalfayear.
Beforetheinkdriesontheagreement,CFOHrterwillhavetobeginsearching
fornewsourcesoffunding.
Thissituationwasapparentlynotanticipatedinthegrandplanwithwhich
PorschestrategistsWiedekingandHrterhadcarefullypreparedtheVW
takeover.Twodevelopmentstookthetwoexecutivesbysurprise.First,the
financialcrisishasledtoasharpdeclineincarsales,shrinkingprofitsinthe
corebusiness.Asaresult,Porschehaslesscashthanexpectedtopaythe
interestonitsloans.
Second,thetwoPorscheexecutiveshadexpectedthesocalledVolkswagen
Lawtobebroughtdownsooner.Thecontroversiallawrestrictsindividual
shareholderstoa20percentportionofvotingrights,regardlessofhowmuch
theyown.ItsabolitionwouldhaveallowedPorschetoacquire75percentof
VWsharesandsignacontrolandprofittransferagreementwiththeVWGroup,
sothatthePorscheboardmemberswouldhavebeentellingtheirVW
counterpartshowtoruntheirbusiness.Moreimportant,itwouldhavegiven
PorscheaccesstoVW'scashreserves,whichstillamountedto8billion($10.6
billion)attheendoflastyear.
PorschecouldhaveusedVW'smoneytopayoffsomeofitsdebt,butthatplan
willnotmaterializeintheforeseeablefuture,becauseacentralaspectofthe
VWLawwillremainineffect:Evenintheformamendedbythefederal
government,thelawcontinuestoguaranteetheStateofLowerSaxonyavetoat
VW.
TheEUCommissionindicatedthatitwillnotfileanobjectiontothisnewVW
LawwiththeEuropeanCourtofJustice,atleastnotnow.ForPorsche,this
meansthatitsexecutivesinStuttgartcannotreachanyimportantdecisionsat
VWwithouttheapprovalofChristianWulff,thegovernorofLowerSaxony.
AndiftherewasonethingWulffdeniedPorsche,wastheaccesstoVW'scash.
4)WiedekingDiscoversDiplomacy
ForPorscheCEOWiedeking,allofthistranslatesintoaseriesofpainful
experiences.HeurgentlyneededmoneyforPorsche,buthecannotgethishands
onVW'sbillions.Hewasunabletoexertthecontrolhehadimaginedhewould
8

haveoverVWatitsheadquartersinWolfsburg.And,finally,hewasdependent
onthegoodwillofthebanks.Wiedeking,amanwhowasneveratalossfor
wordsaboutVWexecutives,politiciansorbankers,isnowforcedtotakean
unaccustomedapproach:diplomacy.
SuddenlythePorscheCEOwaspraisingVWmanagementfordoing"an
outstandingjob"andsweettalkingLowerSaxonyGovernorWulffby
characterizing"cooperationwithhimontheVWsupervisoryboard"as"very
positive."AndalthoughWiedekinghadsaidnothingaboutthebankersheonce
accusedofgreedandincompetence,atleasthehadsaidnothingnegative.
CFOHrterwasnegotiatingwithafewbanksoverthepossibilityofPorsche
issuingabondsothatitcouldsatisfythetermsofitsloanagreementandpayoff
the3.3billion($4.4billion)tranche.However,Porschehadtopaymore
interestonthebondthanonitscurrentloan.Thesecondoptionforobtaining
freshcashwouldbeanincreaseinsharecapital.
ThePorscheandPichfamilieswerestillatoddsoverhowtoliberatetheir
companyfromitscurrentdebttrap.ButthebalanceofpowerbetweenStuttgart
andWolfsburghadalreadyshifted,onceagain,infavorVWCEOMartin
Winterkorn."Thetailisnolongerwaggingthedog,"saidoneVWexecutive,
whonotesthatWiedekingnowknowsthatPorscheneedsVWandnotthe
otherwayaround.
Porschethenintroducedstrictcostcontrolswiththeobjectiveofcutting200
million($264million)incostsinthecurrentfiscalyear.AtitsR&DCenterin
Weissach,therewerefearsthatPorscheengineerscouldbethehardesthitby
thenewcuts.Theirjobsarenowconsideredthemostexpendable,theargument
beingthatPorschecouldcutbackitsownR&Dspendingbyrelyingmore
heavilyonVWtechnologyinthefuture.
AnyprotestsbythePorscheengineerswilllikelyfallondeafears,nowthat
Porschemustbringcostsdownand,mostofall,reduceitsdebt."Ithangsover
uslikeaSwordofDamocles,"saidonePorscheexecutive,althoughhesaidthat
anycomparisonwithSchaefflerwasnotonlyoffthemark,butmaliciousto
boot.
Hehadapoint.Together,SchaefflerandContinentalowedtwiceasmuchas
Porsche.Besides,theContinentalshares,whichShaefflerpurchasedforalotof
money,hadlostthreequartersoftheirvalue.Incontrast,theVWshares
Porscheboughtforabout18billion($24billion)arenowworth35billion
($46billion).

Meanwhile,thereisspeculationinWolfsburgthatPorschecoownerFerdinand
Pichhascomeupwithacompletelydifferentsolution.
PorscheAutomobilHoldingiscurrentlythebiggestshareholderinboth
companies,with50.8percentofVWsharesand100percentofsharesinthe
Porschesportscarcompany.ButnowVWcouldbuythesportscarcompany's
automobilebusinessfromPorscheHolding.ThiswouldturnPorscheHolding
intopurelyafinancecompany,onethatstillholdsitssharesintheVWGroup.
ButtheVWGroupcouldruntheentireoperatingbusiness,whichwould
includetheVolkswagen,Audi,BentleyandPorschebrands.
AdeallikethiswouldenablePorscheHoldingtocancelalmostallofitsdebts,
butforPorscheitwouldalsomeanrelinquishingitspoweraworstcase
scenarioforPorschestrategistsWiedekingandHrter.Thiswasnottheway
theyhadimaginedthegreatVWcoup,whichWiedekinglikestocomparewith
agameofchess.
"Stepbystep,we,theworld'ssmallestindependentcarmaker,areapproaching
analliancewithEurope'sbiggestproducerofmotorvehicles,"Wiedekingsaid
lastNovemberwhenhepresentedPorsche'sbalancesheet.Heconcededthat
theremightdifficultiesalongtheway,butthatinthegameofchessitwould
simplybeaquestionoftime.

THEPROCESSCONTINUED
7)Theworldwidefinancialsystemhitsaniceberginthefallof2008,andthe
bankswontlendWiedekinganymoremoneytocompletetheacquisition.In
fact,theybegintocallintheirloanstriggeringaliquiditycrisisatPorsche.
8)Inthespring,Wiedekinggoeslookingforanoutsideinvestorandfindsone
intheemirofQatar.ButVWsFerdinandPich,togetherwithChristianWulff,
thepremiereofLowerSaxony(whichhasa20percentstakeinVW),and

10

GermanchancellorAngelaMerkeladvisecashrichsheikhstoinvestnotwith
PorschebutinsteaddiverttheirfundstoWolfsburg.
9)PorscheessentiallycollapsesintothearmsofVW;themergeristobe
completedin2011.ThePorscheandPichfamilies,whichcontrolPorsches
votingshares,mustkickintohelpeasethe9billion($13billion)debtburden
thatPorschebringswithit.Theonceindependentsportscarmakerwhich
Wiedekingboastedwastheworldsmostprofitableautocompanywill
becometheVWGroupstenthbrand,onparwithAudiandBentley.
10)OnJuly23,2009,Wiedeking,Hrter,andPorscheadmitdefeat.TheCEO,
wholastyearenjoyedanAmericanstylepaydayof80million($114million),
grabsanother50million($71million)onhiswayoutthedoor.Hrteris
bootedaswell;hegrabs12.5million($18million).MichaelMachtbecomes
Porschesnewchiefexecutive.

AfterEffectsandCurrentSituation
1)VolkswagensEmissionsScandal

Volkswagenhasadmittedthat11millionofitsvehicleswereequippedwith
softwarethatwasusedtocheatonemissionstests.Thecompanyisnow
contendingwiththefallout.
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HowDidtheSystemWork?
Thesoftwaresensedwhenthecarwasbeingtestedandthenactivated
equipmentthatreducedemissions,UnitedStatesofficialssaid.Butthesoftware
turnedtheequipmentdownduringregulardriving,increasingemissionsfar
abovelegallimits,mostlikelytosavefuelortoimprovethecarstorqueand
acceleration.Thesoftwarewasmodifiedtoadjustcomponentssuchascatalytic
convertersorvalvesusedtorecyclesomeoftheexhaustgasses.The
componentsaremeanttoreduceemissionsofnitrogenoxide,apollutantthat
cancauseemphysema,bronchitisandotherrespiratorydiseases.

ExhaustsystemofaVolkswagenGolf

Volkswagenhasusedtwobasictypesoftechnologytoreduceemissionsof
nitrogenoxidesfromdieselengines,byeithertrappingthepollutantsortreating
themwithurea.Thefirsttypeisshownhere.
TheEmissionsTestsThatLedtotheDiscoveryofVWsCheating
TheonroadtestinginMay2014thatledtheCaliforniaAirResourcesBoardto
investigateVolkswagenwasconductedbyresearchersatWestVirginia
University.TheytestedemissionsfromtwoVWmodelsequippedwiththe2
literturbocharged4cylinderdieselengine.Theresearchersfoundthatwhen
testedontheroadsomecarsemittedalmost40timesthepermittedlevelsof
nitrogenoxides.

WhichCarsAreAffected?
TheEnvironmentalProtectionAgencysaidinSeptemberthatitwouldorder
VolkswagentorecallsevenofitsAmericancarmodelswithaffectedengines,
12

whichamounttonearly600,000vehicles.Volkswagenhasnotreleasedalistof
internationalmodels,whichmakeupthemajorityofthe11millionaffected
vehicles,thathaveengineswiththesoftwareinquestion.

VOLKSWAGENJetta2009to2015

VOLKSWAGENBeetleandBeetleConvertible2012to2015

VOLKSWAGENPassat2012to2015

AUDIA32010to2015

VOLKSWAGENJettaSportWagen2009to2014

VOLKSWAGENGolf2010to2015

13

VOLKSWAGENGolfSportWagen2015
TheE.P.A.saidonNov.2thatithadfoundthesametestcheatingsoftwareon
additionalVolkswagenandAudidieselmodelsandonaPorschemodel.The
agencysaiditcoveredabout10,000carssoldintheUnitedStatessincethe
2014modelyear.But,inmeetingswiththeE.P.A.onNov.19and20,the
companyadmittedthatallmodelyearssince2009withits3literdieselengines
containedthesoftwareaswell.Thelatestdisclosurecoversanadditional75,000
vehicles.

VOLKSWAGENTouareg2009to2016

AUDIA6Quattro2014to2016

AUDIA7Quattro2014to2016

AUDIA8andA8L2014to2016

AUDIQ52014to2016

14

AUDIQ72009to2016

PORSCHECayenne2013to2016
WhenWilltheCarsGetFixed?
Volkswagenhasagreedtopayalmost$15billiontosettleclaimsintheUnited
States,anditmustbuybackorfixaffectedvehiclesbyDecember2018.Aspart
ofthesettlement,morethan$10billionhasbeensetasidetobuybackthe
roughly475,000VolkswagensandAudiA3modelsthathave2literengines.
TheFederalTradeCommissionsaidconsumerscouldexpecttogetroughly
$12,500foranoldermodelJettatoasmuchas$44,000fora2014Audi.
Volkswagenhasyettoagreeonwhattodowithitsremainingdieselvehiclesin
theUnitedStates,whichallhave3literengines.InEurope,thecompanysaidit
wouldinstallasmalltubularpartintosomeofitsenginestohelpthemcome
intolinewithcleanairstandardsthere.Thepart,whichisaboutthesizeofthe
cardboardinsidearollofpapertowels,doesntloweremissionsenoughto
complywithAmericanstandards.
WhatIsatStakefortheCompany?
Volkswagenhassetaside16.2billionEuros,orabout$17.9billion,forcosts
relatedtothescandal.ButtheAmericansettlementwiththegovernmentandcar
ownerswillconsumeabigchunkofthatmoney.Thecompanyhas
recentlyrecordedlosses,andinternallyithasshakenupitsleadership.Itschief
executive,MartinWinterport,aswellastheheadofitsAmerican
operationshavesteppeddown,andthecompanysuspendedseveralhigh
rankingexecutives.Thecompanycontinuestofacelegalchallenges,including
civilandcriminalinvestigationsintheUnitedStates,Germanyandother

15

countries,aswellaspotentialfinesontopofthecompensationVWhasalready
agreedtopayaspartoftheAmericansettlement.Onebigrisktothecarmakeris
inEurope.TheUnitedStatesdealfocusesonnearly500,000Volkswagen
vehicles,butthecarmakeradmittedtoinstallingthecheatingdeviceonmore
than11millioncarsworldwide,with8.5millioninEurope.

2)Volkswagensettlesemissionscheatingcasesforuptorecord
$15.3B
Volkswagenhasspendupto$15.3billiontosettleconsumerlawsuitsand
governmentallegationsthatitcheatedonemissionstestsinwhatlawyersare
callingthelargestautorelatedclassactionsettlementinU.S.history.
Upto$10billionhasgoneto475,000VWorAudidieselowners,whothought
theywerebuyinghighperformance,environmentallyfriendlycarsbutlater
learnedthevehicles'emissionsvastlyexceededU.S.pollutionlaws.VWagreed
toeitherbuybackorrepairthevehicles,althoughithasn'tyetdevelopedafix
fortheproblem.Ownerswillalsoreceivepaymentsof$5,100to$10,000,
dependingontheageoftheirvehicles.
Thesettlementalsoincluded$2.7billionforenvironmentalmitigationand
another$2billionforresearchonzeroemissionsvehicles.TheGerman
automakeralsosettledclaimswith44states,Washington,D.C.,andPuertoRico
forabout$603million.Itisstillfacingbillionsmoreinfinesandpenaltiesas
wellaspossiblecriminalcharges.
Volkswagenhasadmittedthatthecars,equippedwith2literdieselengines,
wereprogrammedtoturnonemissionscontrolsduringgovernmentlabtestsand
turnthemoffwhileontheroad.Investigatorsdeterminedthatthecarsemitted
morethan40timesthelegallimitofnitrogenoxide,whichcancause
respiratoryproblemsinhumans.Thecompanygotawaywiththeschemefor
sevenyearsuntilindependentresearchersdiscoveredtheschemeandreported
VWtotheEnvironmentalProtectionAgency.

16

3)NewCheatingSoftwareDiscoveredonVolkswagenGroup3.0
LiterDieselEngines
U.S.officialshavediscoveredthreenewunapprovedsoftwareprogramsthat
allowscheatingofpollutioncontrolsonVolkswagens3.0literdieselengines
madebyAudiReutersisreporting.
TheengineismadebyVolkswagenGroupsAudidivisionandisusedinthe
AudiQ7,PorscheCayenneandVWTouaregSUVs.
Thesoftwareallowstheturbochargeddirectinjectionenginetoshutdownits
emissionscontrolsystemsafterabout22minutesofdriving,allowingthe
vehiclestopassgovernmentemissionstests.Typically,governmentemissions
testslastforaround20minutes.Thisisinadditiontopreviouslydisclosed
softwareusedonthe3.0literdieselengine,whichVWadmittedwasusedto
makeaffectedvehiclespassgovernmentemissionstests,butshutdownthe
emissionscontrolsinrealworlddriving.Volkswagenhasadmittedithad
thwartedU.S.dieselemissionstestsforyearsandagreedtofixorbuyback
vehiclesfromconsumersandprovidefundingthatcouldbenefitcleaner
technologies.Thesettlementcovered2.0literdieselenginesandcouldcostup
to$15.3billion.However,thatsettlementdoesnotincludeanestimated85,000
vehicleswiththelarger3.0literdieselandanagreementforpenaltiesisstill
monthsaway.Audimanagersarescheduledtoappearatahearinginfrontof
U.S.environmentalauthoritiesonAug.10,BildamSonntagsaid,addingthe
carmakerwasbracingforasubstantialpenaltypayment.

4)PorscheV8enginetopowermoreVWGroupproducts
MakingitsdebutinthenewPorschePanamera,theStuttgartmanufacturers4.0
litre,twinturboV8enginewillenterservicewithupcomingmodelselsewhere
inthegreaterVolkswagenGroup.AnewfactoryhasbeensetupnearPorsches
manufacturingplantinStuttgart,Germanyfortheproductionofthenewengine
thatwillalsofeatureinupcomingBentleys,Audisandofcourse,otherPorsche
models.

17

Thetwinturbochargersaremountedwithinthecylinderbanksforcompact
packagingandimprovedresponse,inasimilarveintotheapproachtaken
earlierbyBMWandMercedesAMG.

5)PorschebracedforVolkswagenhit
GermanluxurycarmakerPorsche(ETR:PAH3)expects
theVolkswagen(FRA:VOW3)emissionsscandaltoweighonitshalfyear
results,whichitreportsonAugust1.BoththefinancialratiosofPorscheSE
anditssharepricearethereforesignificantlyinfluencedbythedevelopmentof
theVolkswagenGroup,PorscheschairmanHansDieterPtsch
toldshareholdersatthegroupsAGMinJune.
WhilewehavealwaysbenefitedfromthegoodVolkswagenfiguresinearlier
years,in2015wewereunfortunatelyunabletoavoidtheeffectsofthediesel
issue.

6)Porschemakingmoremoney
PorschenowmakesmoremoneyforVolkswagenthantheVWbranditself
ThedramahassomewhatobscuredarapidriseinfortunesatPorsche.Inthe
pastthreeyears,Porschesoperatingprofithassoaredasthegroupsflagship
VWbrandhasdipped.Lastyear,forthefirsttime,Porschemademoremoney
thanVW,eventhoughtVWsold25timesmorecars(4.6millionversus
187,000).
AccordingtoTimUrquhart,ananalystatIHS,aresearchfirm,Porscheison
tracktodothesameagainthisyear.Porscheiswellontargettosellmorethan
200,000unitsin2015andwillnodoubtgenerateasignificantlylargeroperating
profitthanlastyearsfigureof2.7billion($3billion),hesaid.VWmadea
profitof2.5billionlastyear.

18

Theacceleratedintegrationhasallowedustostartimplementingajointstrategy
forPorschesautomotivebusinessmorequickly,torealizekeyjointprojects
morerapidly,andhencetoleverageadditionalgrowthopportunitiesinattractive
marketsegments.IthasalsoenableVolkswagenAGandPorscheAGto
concentratefullyontheiroperatingbusinessbymakingdaytodaycooperation
muchsimpler.
TheconsolidationofPorscheshighlyprofitableautomotivebusiness,which
wasexpectedtotakeeffectfromAugust1,2012,hadapositiveimpacton
Volkswagensconsolidatedprofit.Withregardtooperatingprofitforthe
currentfiscalyear,theinitialhighdepreciationandamortizationcharges
resultingfromthesocalledpurchasepriceallocationareexpectedtolargely
offsettheearningscontribution.Asaconsequenceoftheconsolidationof
Porschesautomotivebusiness,Volkswagenmustremeasureitsexistingshares
inPorscheZwischenholdingGmbHattheirfairvalue.Forthecurrentyear,
basedonthemeasurementparametersasofMarch31,2012,thishasresultedin
aclearlypositivenoncasheffectofmorethan9billionintheVolkswagen
Groupsfinancialresult.NetliquidityintheAutomotiveDivisionisexpectedto
declinebyatotalofapproximately7billion.Apartfromthecashconsideration
ofaround4.46billion,theinitialconsolidationofPorscheAGsnegativenet
liquidityexpectedtobearoundminus2.5billionhasimpactedliquidityat
theVolkswagenGroup.
Thecoursewearefollowingmakesstrategicsenseandwillbringsustained
benefitsforallstakeholders,itcreatestransparencyastofuturedevelopments,
andlaysthefoundationsforswiftlyintensifyingcooperationbetween
VolkswagenandPorscheAG.ForVolkswagen,oursoundfinancialand
liquiditypositionandmaintainingourstrongratingarealsoimportant,CFO
Ptschcontinued.

19

INNOVATION
Withouttradition,artisaflockofsheepwithouta
shepherd.Withoutinnovation,itisacorpse.
WinstonChurchill

Group12hasinnovatedbyfirsthavinganacquisition
ofNANOFLOWCELLAGbyFIATCHRYSLER
AUTOMOBILS(FCA)followedbyamergerofFCA
andMAHINDRA2Wheelers.

20

Overview
Fortheinnovationpartofthisprojectwehavedecideda2partprocesswhich
involvesaprocessofanacquisitionandamerger.Thefollowingcompaniesare
involved:
FIATCHRYSLERAUTOMOBILES
NANOFLOWCELLAG
MAHINDRAandMAHINDRA(2Wheelers)

Companyprofiles
MahindraandMahindra
Mahindra&MahindraLtd.(M&M)engagesintheautomotiveindustry.The
companyofferscars,electricvehicles,pickups,andcommercialvehicles.The
company has presence in countries like Australia, Europe, Latin America,

21

Malaysia,SouthKorea,andSouthAfrica.M&Malsoprovidescomponents,
sparesandservices.Thecompany'scommercialvehicleproductsincludeBolero
PickUp,Genio,AlfaandGio.Thecompanystartedintheyear1945andis
basedinMumbai.

FiatChryslerAutomobiles

ItisanItaliancontrolledmultinationalcorporationandcurrentlythe
worldsseventhlargestautomaker.Thegroupwasestablishedinlate2014by
mergingFiatS.p.A.intoanewholdingcompany,FiatChryslerAutomobiles
N.V.,whichisincorporatedintheNetherlands(withheadquarters
inAmsterdam)fortaxpurposes.TheholdingcompanyislistedontheNew
YorkStockExchangeandBorsaItalianainMilan.ExorS.p.A,anItalian
investmentgroupownedbytheAgnellifamily,owns29.19%ofFCAand
controls44.31%throughaloyaltyvotingmechanism.
FCAsmassmarketbrandsoperatesthroughtwomainsubsidiaries:FCA
Italy(previouslyFiatGroupAutomobiles)andFCAUS(previouslyChrysler
LLC).Thecompanysportfolioincludesmanywellknownautomotivenames
includingAlfaRomeo,Chrysler,Dodge,Fiat,Fiat
ProfessionalJeep,Lancia,RamTrucks,Abarth,MoparandSRT.FCAalso
ownsMaserati,Comau,MagnetiMarelli,andTeksid.TodayFCAoperatesin
fourregions(NAFTA,LATAM,APAC,EMEA).

NANOFLOWCELLAG
NanoFlowcellisanelectriccarmanufacturerregistered
inLiechtenstein,foundedin2013.NanoFlowcell'sfirstcarQuanthasthree
variantsQuantE,QuantFandQuantino
TheuniquecombinationofnanoFlowcellandbiIONelectrolytesissuperior
toanyavailablebatterytechnology.Leveragingthetechnologicalpropertiesof
nanofluidsandflowbatteries,Nanoflowcelldevelopedagroundbreakingnew
energystorage.Onparwithmodernlithiumionaccumulatorsinenergy
density,butsafer,environmentallycompatibleandmoreconvenient.
22

nanoFlowcellstoreselectrochemicalenergyandreleaseitaselectricity.
Benefitsofthistechnologyareitsthermalsafety,lowcost,highefficiencyand
greatflexibility.
Atlast,withnanoFlowcell,mobileelectricalpowerbecomesavailableinan
environmentallysustainable,resourceefficientandnonhazardousmannerfor
thefirsttime,providingnewperspectivestoelectromobilityonland,atsea
andintheair.

ABriefexplanationofthe2partprocess
FirstPartTheAcquisition

We have decided firstly to do an acquisition of Nanflowcell AG by Fiat

Chrysler Automobiles (FCA). Nanoflowcell AG being a breakthrough
technologycompanyisbeingacquiredbyFCAtoincorporateitsnewofageion
liquidtechnologyintotheircarslikeJEEP,Maserati,AlfaRomeoetc.FCAis
the7thlargestautomobilemanufacturerintheworldandacquiringNanoflowcell
wouldhelpthembecomeoneoftheleadersintheautomobilesegment.Butthe
questionremainswhyNanoflowcellforanacquisitionandnotanyothernewof
age

clean

energy

company?
Electronicvehicleshavelongbeenstationedtobethepinnacleofinnovation
andearmarkedtoreplacestandardpetroldieselvariantsinnearfuture.There
aredozensofelectriccarsinthemarketandmanysuchinthepipelineswhich
are being marketed pompously with the zero emissions tag. However, the
powerchargingthebatteryisnotzeroemissions,as
thelicenseplatesays,andthusneitherarethecarsrunningontheenergy.Abit
of fudging has been necessary on their part with the claim to carbonfree
transport.Theirenergysourceperseisnotemissionfreeorcleanenergysoto
speak.ThisformsthetippingpointwhereFlowcellengineshavecleanenergy
sourceandnotfudgedzeroemissionstag.Electronicvehiclesassuchonan
averagecover185milesonafullchargewithaboutminimum45minutesof
charging downtime. Flowcell has zero waiting time on refueling and lesser
downtimecoveringlongerdistances.Anotherfavorablefactorwouldbethatit
does not require major operational or structural changes that comes with
electronicvehicles.Thesaidelectrolytesolutionshouldbemadeavailableto
fuellingpointsallover.
23

Reasonsforacquiringnanoflowcell
1)FCAsstrongfinancialposition

FCAhasrecentlyrecordeditshighestprofitswithanEBITof2.6billion.Its
profitsinNAFTA(NorthAmerica,Europeetc)regionhassignificantlyincreased
andareinafinancialpositiontoacquirenanoflowcell.Althoughithasacurrent
debtof6.6billioneurositscurrentbusinessplansalongwithanacquisitionof
nanoflowcell would help them cover the debt and its acquisition cost of
nanoflowcellinnotime.

2) FCAscommitmenttoSustainableMobility
Asdriverexpectationschangeandmobilityscenariosevolve,FCAhasdevoted
resources to research, development and experimentation of innovative
technologies, including a growing number of connectivity and mobility
solutions and autonomousvehicle technology. FCAS commitment towards
sustainablemobilityandpromisetodeliveronitmakessenseforthemacquire
nanoflowcell.FCAclearlymentionstheimportanceofsustainablemobilityin
itsannualreportstatingthatitwantstofurtheritscauseofsustainablemobility
andcontinueitspromisetoitsshareholders.Acquiringnanoflowcellwouldhelp
themtoinstillconfidenceontotheirshareholders.

3) Materialityanalysis
FCA has a materiality analysis published in its annual report stating the
importanceoffactorsrankedbyshareholdersintermsofagraph.

24

Thisdiagramclearlystatestheimportanceplacedontheenvironmentanda
sustainableproductbytheshareholders.Henceacquiringnanoflowcellwould
helpthemconverttheseexpectationsoftheshareholdersintorealityshowinga
realstatementofintentbyFCA.Nanoflowcellwithitsunparalleledtechnology
wouldbeaperfectfitforFCA.

4) AddinganewleaftoitsResearchandDevelopmentwing.

Continuous innovation is essential to development of products that are

environmentally and socially sustainable. This is the objective of FCA and
addingnanoflowcelltotheirR&Dportfoliowouldopenacompletenewworld
ofinnovation.Duringtheyear,theGroupinvestedapproximately4.1billionin
R&D, representing around 3.7 percent of net revenues from Industrial
Activities. The Groups innovation activities have generated a significant
intellectualpropertyportfolioovertheyearsand,atyearend2015,FCAhada
total of 8,462 registered patent applications and 4,251 protected product
designs.
InnovationhasalwaysbeentheforefrontforFCAandnanoflowcellwouldhelp
themtofurthertheircauseevenmore.

4)PatentedTechnology
Althoughaverysmallpoint,Nanoflowcellhasapatentedtechnologyforits
25

sustainablebatterypoweredcars.NanoFlowcelltechnologywouldbeahuge
boostforFCAasnoonehascomeclosetoreplicatingsuchatechnology.

5)NanoflowcellTechnology
AlmostallelectricvehiclessharethesameweaknesstheyaredrivenbyNiMh
orLiionbatteries;technologythatdoesnotconserveresourcesandisneither
environmentallyfriendlynorsustainable.Asidefrompossiblethermalcollapse,
lithiumion batteries are harmful to the environment as they are not 100%
recyclable. They contain raw materials such as aluminium, cobalt, copper,
nickelandmanganese,mostofwhicharedifficultandexpensivetorecycle.
Lithiumremainsasawasteproduct,leftbehindbypyrometallurgicalrecycling.
TheserawmaterialsexistinfinitequantitiesonourEarth,noteveninsufficient
amounts to manufacture enough batteries to satisfy current global vehicle
demand.Therawmaterialbottlenecksarethereforeprimarilythespecialmetals
(rareearths)andlithium.
NanoFlowcell AG developed its groundbreaking nanoFlowcell technology.
The energy source based on flow cell technology works with nontoxic,
environmentally friendly and nonflammable electrolytes, which are energy
efficient, sustainable and inexpensive to manufacture. Where conventional
battery technologies fail due to their lack of perspectives as mobile energy
carriers in electric vehicles, nanoFlowcell offers an independent and
sustainablesolutionfortheelectrificationofglobalindividualmobility.
Hence acquiring nanoflowcell would give FCA direct access to the best
technologyinthemarket rightnowenablingthemtogetoutof thecurrent
saturation of the automobile market and giving themselves a competitive
advantageoverothers.

6)TechnologyapprovedinEurope
ThetechnologyofnanoFlowcellhasbeenapprovedinEurope.FCAalready
having a strong hold in the European markets or as they like to call it the
NAFTAregions.ThebrandscurrentlydoingextremelywellintheEuropean
markets are JEEP, Alfa Romeo, Dodge and Maserati. Incorporating the
nanoflowcelltechnologyintothesebrandswouldbeaquantamleapforFCA
andwouldbeconsideredasteptowardsglobaldominance

26

7)ConvertingConceptTechnologyintoReality
AlthoughnanoFlowcellispatentedandhasbeenapprovedinEuropetheyare
stillintheconceptcarstage.ThisistheperfecttimeforFiatChryslertobuy
themandconverttheirconceptcarsintoreality.

8)ViablecompetitoragainstTesla
AsweallknowTeslamotorsissoongoingtolaunchitmodelXwhichisa
batterypoweredelectriccar.WhenFCAacquiresNanoflowcellitgetsanupper
handintermsoftechnology.TeslasModelXrequiresthebattrytobecharged
for a certain amount of time and can hit a speed of 200kp/h whereas
Nanoflowcell has a technology that is as simple as filling gasoline without
actuallyharmingtheenvironment.

9)Nanopumps(Willbebetterexplainedthroughthe
presentation)

Whatisthis?Wellasexplainedearliernanoflowcellhasbatterypodsthathave
tobeinstalledintothecarswhichisthenchargedlikebyattachingakindof
charger.nanoFlowcellpoweredelectricvehiclesdonotdependonaspecific
charging infrastructure nor require timeconsuming battery recharging.
Exhausted biION liquids will be refueled as easily as gasoline. As biION
electrolytes are nontoxic and thermally stable, there will be no onerous
regulatory requirements for logistics and storage of those liquids. Easily
accessibleeverywhere,biIONelectrolytefluidscouldbedistributedthrough
existingpetrolstationsworldwideorcanstarttheirownexclusivenanopumps.
ThiswillcreateanincreaseintheirrevenueandfurtheraddtoFCASbenefit.

10)NanoflowcellsPresenceintheAutomobilesegment
Nanoflowcellcurrentlyhas3carsQuantE,QuantFandQuantino.Itspresence
inthissectorwouldmakeiteasierforFCAtoincorporatethenanoFlowcell
technologyintotheircarsforfutureproduction.

11)LongtermVisionandShowofintent.
27

FCArightnowisinabitofturmoilasitshareholderexpectationsarenotbeing
met.SuchanacquisitionwouldreallyshowtheshareholdersthatFCAplansto
stayintheautomobileindustryandnotonlystaybutdominatetheindustryin
thelongrun.Itcanalsobroadenitshorizonbyactuallylookingintootherareas
suchasaviationandrailwaysasnanoflowcellhasupcomingconceptsinthose
sectorsaswell.ThiswouldreallystrengthenFCASstandinginfrontofits
shareholdersandputitinagoodposition.

PART2Themerger
IndianTwoWheelerMarketisnoticingacontinuousupsurgeindemandand
thusresultingingrowingproductionandsalesvolume.Thisowesalottothe
launching of new attractive models at affordable prices, design innovations
madefromyouthsperspectiveandlatesttechnologyutilisedinmanufacturing
ofvehicles.Thesaleoftwowheelerproductshasincreasedsubstantially.The
salesvolumesinthetwowheelersectorshotupfrom15percentto24percent
between200809and201415.
FCAhasenteredtheIndianmarketsinthe2wheelersegmentwithitsbrands
Linea,Puntoetcbuthasnothadmuchsuccess.Forittoenterthecurrently
boomingsectorwithitsnewnanoflowcelltechnologywouldbeaverysmart
move.The4wheelermarketinindiaisprettysaturatedandrequiresalotmore
ofinvestmentintermsoftime,effortandcost.AlsoFCAmaynothaveitin
themselvestoevenmergewitha4wheelercompanyinIndiarightnowdueto
itsfinancialstandpoint.EnteringintoamergerwithalocalbrandlikeMahindra
wouldnotbethatexpensiveandwouldhelpthemestablishthemselvesinthe
Indianmarket. Salesofscootersincreasedby35.86percentto468,368units,
thedemandformotorcyclesshotupbyastrong16.24percentto1,024,926
units.Thereismorescopeofgrowthinthe2wheelermarketinIndiarightnow
ratherthanthe4wheelermarketwhichisveryvolatile.Soitmakessensefor
FCAtomergewithalocalbrand.ButwhywithacompanylikeMahindra?
Mahindra2wheelersisarelativelynewentrantinthemarketandislookingto
become the biggest player in the market. Not only this but others such as
Honda,HeroandTVShavenothadahistoryofmergersoracquisitionslike
Mahindrahas(egRenault,SSANYONG).Mahindraalsohasotheraspectsofits
businessliketractors,carswhichcanlaterbemergedwithifneeded,
OnceFCAacquiresNanoflowcellandthenentersintoamergerwithMahindra
then the Nanoflowcell technology can incorporated into the Mahindra 2
wheelers.Mahindrawouldnotwanttosaynotothisdealasthistechnologyis
28

thebestthereisandusingitintheir2wheelerswillhelpthembeatthelikesof
Honda,Hero,Tvsetc.Thefuelefficiencyaspectthatismostsoughtoutforis
handledandischeaperthanpetroltoo.FCAknownforitsprowessindesign
couldfurtherhelpMahindrainitsquesttobethebestandbothcompaniescan
workinsynergiestobecomethebiggestplayerinthe2wheelermarket.

ReasonsforamergerbetweenMahindraandFCA

1) Opportunityavailableinanemergingmarkets
AgroupofOEMs,alongwithindustrybodies,haveformedaconsortiumcalled
xEVOne.ThelaunchoftheconsortiumisscheduledforJuly15,2016.The
members of theconsortium includeMahindra&Mahindra,MahindraReva,
MarutiSuzukiIndia,FordIndia,TataMotors,SIAMandARAI.Thenewstep
is part of the central government's Faster Adoption and Manufacturing of
(Hybrid&)ElectricVehiclesinIndia(FAME)scheme.Thereisnocomponent
manufacturer in xEV One now. Its members will come together and share
projectionsandplanswithcomponentmanufacturerstobringthemonboardthe
consortium. The move is part of the Indian governments efforts to have
6millionelectricandhybridvehiclesontheroadsby2020undertheNational
Electric Mobility Mission Plan 2020 and FAME (Faster Adoption and
Manufacturing of Hybrid and Electric Vehicles) programmes. Under these
programmes,thegovernmentandindustryplantoinvestRs.12,000croreeach.
IntheUnionbudgetforthisyear,thegovernmentallocatedRs.200crorefor
theseprogrammes.FordMotorCo.hasvetoedanearlierdecisionofitsIndian
unittoparticipateinaconsortiumthatwastocreateasupplierbaseforcritical
hybrid and electric vehicle parts, dealing a blow to Indias plans to boost
electricvehicleproduction.FCAcouldswoopinandtakeFordsplaceanduse
thegovernmentaidandtaxbenefitsattachedwithittotheiradvantage.

2) Absenceofacaptivefinancecompany

29

FiatChrysleratpresentdoesnotpossessacaptivefinancewingwhichitstands
to gain with this merger. A captive finance company is asubsidiarywhose
purpose is to provide financing to customers buying the parent company's
product.Captivefinancecompaniescanrangeinsizefrommidsizedentitiesto
giant firms, depending on the size of theparent company. Their range of
servicescanalsovarywidely,frombasiccardservicestofullscalebanking.A
captivefinancecompanycanbeasourceofsignificantprofitsfortheparent
organization.

3) OppurtunityintheAPACregion
TheAPACregionaccordingtoFCAsAnnualreportistheAsiapacificregion.
ThismovewouldreinvigoratetheirpresenceintheAPACregionandholdthem
ingoodsteadinthehighpotentialuntappedurbanmarkets.Thishasalsobeen
toucheduponbrieflyintheirlatestannualreport.

4) CurrentPresenceofMahindra
Mahindraisalreadypresentinthe2wheelermarketwithitsbrandsMahindra
Gusto and Mahindra Centuro. Mahindra is relatively new in the 2 wheeler
market copared to big time players like TVS, HERO and HONDA. For
Mahindra to get such a technology of Nanoflowcell and incorporate it into
Indias huge 2 wheeler market would be a huge advantage for them. It is
currently 6th in India behind Hero, Honda, TVS, Bajaj, Royal Enfield
respectively.

5) OverallSynergy
Theverypossibilitiesofthesetwogiantshavingasymbioticrelationshipexists
in thefact that their segments donot clash. Both couldharness theproject
successfullyandcouldverywellimplementthetechnologyintheirsegments
andreapbenefitsindividually.

30

6) FCAsfinancialsituation
FCAiscurrentlylookingforamergerduetoanabsenceofacaptivefinance
companyandotherreasons.Butawillingpartnerremainselusiveforacompany
that trails its competitors in the key investment areas of electrification,
autonomous driving and connectivity. Ford responded to FCA's openended
overturebyissuingastatement:"Asweconsistentlyhavesaid,Fordhasnoplan
or interest other than to continue to accelerate our One Ford plan." Nigel
Griffiths,chiefautomotiveeconomistforIHSAutomotive,saidthatinthelast
five years, the industry has faced an eversteeper mountain of technology
challenges including carbon dioxide emission goals, electrification and now
autonomousdriving.ThisisanexcerptindicatingthatFCAisnotexactlyindire
straitsintermsofYoYprofitsbutknowsitwouldeventuallyneedtomerge.
Hence,accordingtomanyexpertsFCAareusingsustainablemobilityasaveil
tosqueezethroughamerger.Whatbetterwaytoactuallyachievethesenotions
bytakingthisprojectandeventualinternationalconversionalongwithM&M
initiallywiththe2wheelermarket.

7) Presenceofstrongalliedservices
M&Mhasestablishedkeyalliedserviceslikehighwayassistance,breakdown

support,dealershipsupport,financingetcwhichwouldprovideastrongsupport
systemforthemechanismtofunction,tosustain.Especially,itbeingafirstof
itskindmassscaleliveproject.

8) AdvantageMahindra
It makes sense for Mahindra to merge with fiat for the 2 wheeler market
initially.LateronMahindracanalsostrengthenitsotherautomobilesectorslike
tractors(Highestmarketshareinindia)cars.Thiswouldhelptheminagreat
wayandstrengthentheirpositioninthesemarketsevenmore.Thetechnology

31

ofnanoflowcellwouldbeabreakthroughforamarketlikeIndiafor2wheelers
and4wheelers.

9) FCAsGlobalnetworkandpenetration
FCAspresencein150+marketsallovertheworldcanactuallyhelpMahindra
if they decide to go global which they are. Also there is a possibility of a
worldwide merger of FCA and Mahindra in the two wheeler market or 4
wheeler market which can possibly see brands like Scorpio, XUV etc use
FCAsglobalnetworkandpenetratethemarkets.FCAcurrentlyhasnocarsin
thebracket ofascorpioandXUVandconsideringtheirpostioninIndia,it
wouldnot bea badideatomergeeveninthe4wheeler marketbygiving
Mahindrathenanoflowceltechnology.

32

10)Mahindrasadditiontotheircleanenergywing

MahindraisalreadytheleaderincleanenergyinIndiaintermsofsolarenergy
and their effort in terms of innovation is stressed upon. The merger could
possibleopenupanewhorizonforthecleanenergywingforMahindraby
incorporatingthenanoflowcelltechnologynotonlyinitstwowheelersbutalso
inothersectors.

11)Potentialgrowth
HasthepotentialtocatapultMahindrabrandnameintoagloballeader,createa
marketwhereitdoesntexist.Thisprojectdoesreallyhavethepotentialtogive
TESLA a run for its money as it does not require any required charging
downtimeandisactuallydeliveringonitspromiseofbeingzeroemissions.
AnandMahindrarecentlyaddressedhisshareholdersinthe70 thAnnualGeneral
meeting that they want toget into the sustainable mobilitysector and what
betterthantoincorporatenanoflowcellintheir2wheelersinthestart.

33