Mahindra Case Study

TABLE OF CONTENTS

INTRODUCTION                                                                                                                    1

MAHINDRA TWO WHEELERS LIMITED (MTWL)                                                       2

PEUGEOT (INTRODUCTION)                                                                                             2

IMPACT OF CURRENCY FLUCTUATION IN PEUGEOT                                             3

PEUGEOT POLICIES ON CURRENCY FLUCTUATION RISK MANEGEMENT     4

FOREIGN EXCHANGE RATE RISKS DURING ACQUISITIONS                                5

RECOMMENDATION                                                                                                           6

CONCLUSION                                                                                                                        7

INTRODUCTION

This report studies the acquisition process of Peugeot motorcycles (Investee company) by Mahindra motorcycles limited (Investor company). This report analyses all the currency rate fluctuation risk that is involved in any multinational business. It also analyses the risk involved during an acquisition of multinational companies. The risk involved is transaction risk, translation risks and operating risks. The report has distinguished each risk and its implications and the methods used to effectively manage such risks in such environment. The methods discussed in the report for risk management are financial derivatives which include forward contracts, future contracts and options.  . The risk management techniques used by Peugeot is studied through the financial report published by the company and a recommendation is made to Mahindra in terms of capital needed for the acquisition.