Thursday, August 09, 2012

DRIVING BEYOND WHEELS?

Over the years, Anand Mahindra has taken his group company to many territories uncharted by him; and his wishlist doesn’t seem to end. Is he treading on too risky a ground? B&E traverses inside his group and interviews the head honcho along with other group heads

It was celebration time at . From students to teachers, all were gearing up for that big event – their Golden Jubilee Foundation Day. However, events didn’t unfold as smoothly as were anticipated and wished for, for the Indian Prime Minister, Dr. Manmohan Singh, the Chief Guest for the occasion, didn’t turn up. What followed was obvious disappointment at having missed the company of India’s top political leader. And then walked in Anand Mahindra, Managing Director & Vice Chairman of Mahindra & Mahindra (M&M) Group, inarguably one of India’s top corporate honchos. Singularly, with a brilliant speech that loquaciously and masterfully expounded various leadership aspects – from John F Kennedy to Jawaharlal Nehru – Mahindra was impressive not only in delivery, but also in the implicit arguments and pressing intent brimming explosively under his words. What stood out in that particular speech was Mahindra’s narration of incidents from The Mahabharata, drawing metaphors time and again to real life, enforcing upon the students the need to look into and rediscover their ‘dharma’ and to ever continuously strive for excellence without compromising with quality. Not many would have realised this, but what Mahindra spoke that day, was a summary of his most important lessons from life, and of the questions on growth and progress that he still is striving hard to answer; questions, that perchance are the very issues that his group is facing today, and at the most critical crossroads.

When Anand Mahindra started his journey with the Mahindra Group in 1981 as an Executive Assistant to the Finance Director at Mahindra Ugine Steel Company Ltd, industry watchers labelled his arrival as ‘yet another’ attempt by ‘yet another’ business family to strengthen its hold on ‘yet another’ business. But as the years rolled past, this young Harvard Alumnus proved his mettle, with his unparalleled understanding of both the consumer market and employees alike, and by 1997, had been elevated to the post of MD of the group. Quick climb up the ladder, but the real tale began right at that point when he assumed powers to make strategic decisions for the entire group! Over time, he not only effected a metamorphic transformation of the group into a more professionally-run organisation, but also expanded the group’s footprint beyond its core automotive and farm equipment businesses, thereby diversifying into sectors like IT, Hospitality and Financial Services, all of which have helped the group scale creditable heights. And his sweet tooth for the leadership slot has always compelled him to strive harder. Even experts believe that such big ‘diversified’ ambitions will continue to remain the driving force behind this group’s growth in the coming years.

However indisputable might be Mahindra’s leadership intent, the truth also is that striving hard to break beyond past estimates, Anand Mahindra has bet upon a few areas in recent times, which might either succeed in achieving the visionary targeted result for the group or could hit the group situationally extremely hard. Be it the $625 million acquisition of the troubled Satyam in April 2009, which made this conglomerate the de facto #4 in the IT sector, or the IPO of Mahindra Holidays & Resorts in June 2009, that was oversubscribed 10 times over, Anand Mahindra’s recent leadership charge for his $6.7 billion brigade is a brilliant case study that is in the historic making.

Truly, as far as Mahindra Group’s profit margins are concerned, the Q3 FY2009-10 results are not quite a treat for the onlookers. During the quarter, the group’s operating margins dipped by 2% (at 14.54% of revenues) as compared to the previous quarter. This disclosure led to a 5.5% dip in the company’s share price, which closed at Rs.1,071.25 on January 25, 2010, the day the Q3 results were announced, thereby marking the biggest slump at the bourses for the giant over the past five months. Yes, one of the prime reasons for the aforesaid fall in profitability was the rise in commodity prices, which over the past quarter, have increased by a considerable 1.7%, thereby affecting the group’s bottomlines directly; but a focus was also subsequently raised by the industry and even competitors on whether Mahindra was, or was not, prepared for the more than expected cost pressures (Shashank Srivastava, CGM, Marketing, Maruti Suzuki, while adding that Mahindra is currently one of the toughest competitors that Maruti has in the Indian market, shared with B&E, “Anand Mahindra has built a very strong organisational structure within the group, but what fascinates me most are the experiments that the company has done over the past years. For instance, in the case of its auto business, be it the Xylo or the Logan, both of them have helped the company’s image grow beyond that of just being a Jeep-maker in the country.”) Especially because Anand Mahindra has traditionally espoused the Welch way of being amongst the top within their operational sectors and of not settling for anything less (“We have always aimed for the No.1 or No.2 spot in the segments that we operate in...” Anand Mahindra tells B&E).


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