Shah Rides SUVs to Drive M&M's Top-line

Emphasis on 'capital allocation discipline' and robust performance by auto business help company post 18.4% ROE in FY24.

- Karan Dhar

MAHINDRA GROUP managing director and CEO Anish Shah places great emphasis on ‘capital allocation discipline’, something the 79-year-old conglomerate has done well in the past. “By capital allocation discipline, we don’t mean only where we put capital, it is also ensuring that the capital we put in is generating the returns we had committed when we infused the capital. And it’s also being very clear about what the milestones are, what the execution metrics are and being able to make big decisions if something is not going as per what we had expected,” he says.

Since Shah took charge as group MD & CEO, M&M has exited 15 underperforming businesses, including South Korean automaker Ssangyong, which it acquired for $463 million in 2010.

Mahindra & Mahindra’s singleminded focus on sport-utility vehicles (SUVs) has paid off. The automaker bucked the industry-wide trend of de-growth in passenger vehicle sales in June and August, thanks to its recently launched compact SUV XUV3XO, a timely overhaul of the erstwhile XUV300. Its market share in domestic passenger vehicles rose from 8.96% in FY23 to 10.75% in FY24. In August, market share hit a high of 12.46%, just 9 basis points behind Tata Motors, the country’s third-largest carmaker. M&M is eyeing mid-to-high-teens volume growth in SUVs this fiscal amid tepid industry growth.

The automaker is taking a calibrated approach by investing both in internal-combustion engine (ICE) and electric vehicles. It plans to spend `27,000 crore on auto business during FY25-27. More than half of the total investment plan in automobiles is still in the ICE portfolio. The company plans to invest `14,000 crore on ICE and `12,000 crore on EVs over the next three years. “We are not going to ignore ICE because ICE continues to be an important part of the portfolio and will continue to be important for consumers over the next five-seven years,” says Shah.