The Conversation ANISH SHAH
Fortune India|December 2021
Anish Shah, MD & CEO, Mahindra & Mahindra (M&M), took charge of the group from Pawan Goenka at a time the economy was under a lockdown. Shah, the first professional CEO to have complete oversight of the group in its 75-year history, says M&M aims to dominate the SUV segment again and will not hesitate to pull away from businesses that don’t make financial sense.
PAVAN LALL

GROWTH WITH CAUTION

It’s been around a year since you’ve been running the group. What is the one big change that you have implemented?

Technically, I’ve been in this role since April (2021), but a lot of the work started in April last year when we started taking the tough decisions. The one big change is going back to the group’s earlier fiscal discipline. Ten years ago, we had leadership that included Bharat Doshi and Uday Phadke, who really drove fiscal discipline. We may have lost that for a variety of reasons, but it was important to get it back, and we are on track.

What has been done to maintain a tighter ship? In the long term, which businesses will break rank, chart a stronger course and see growth in multiples?

What we did in March 2020 was to identify all loss-making businesses. The loss was ₹3,500 crore (most of it due to overseas subsidiaries) then and we put it in three categories. Category A was where we saw an 18 per cent RoI (return on investment) pathway. Category B was less but with a strong possibility of say, 10-12 per cent RoE, and third (Category C) was neither of the above, so the idea was to sell or shut them. SsangYong was in Category C, as was GenZe (electric two-wheelers), GippsAero (Mahindra Aerospace’s Australian subsidiary) and dairy business, which we exited. MFCS (Mahindra First Choice Services) was sold to the TVS Group. We decided not to bid for USPS (US Postal Service) contract to supply small delivery trucks. All necessary actions on Category C have been taken. This strategy has borne results in the last one year and we are expecting losses from overseas subsidiaries to go down to ₹300 crore in FY22 and further in subsequent years. In Category A, we are working on initiatives for MAgNA (Mahindra Agriculture North America), PMTC (Peugeot Motorcycles) and Erkunt (a tractor company in Turkey) and have restructured MANA (Mahindra Automotive North America) and Pininfarina (a design firm based in Italy). In Category B, there will be a quantifiable strategic impact, and businesses on path to profitability include Mitsubishi Agri Machinery, Sampo (Finland-based farm equipment maker) and Hisarlar Ag Machinery.

The roadmap for the next three years is clear, which is to focus on accelerating core growth: Farm, Auto, Tech Mahindra, Financial Services, and then our growth gems. We have allocated up to ₹3,500 crore over the next three years to facilitate the scaling up of our growth gems. The funding for these gems will come purely from the investment portfolio. We see potential value creation or IPO in the next three-five years in businesses that include Accelo (steel), Agri, Classic Legends, Renewables, Rural Housing Finance, Bristlecone, apart from listed companies Mahindra Logistics, Mahindra Lifespace Developers and Mahindra Holidays and Resorts.

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