Why Anish Shah is doubling down on the 'RISE' philosophy at Mahindra & Mahindra

In 2010, Mahindra & Mahindra (M&M) bought the South Korean company SsangYong Motor. The deal was a statement of intent, aligned with its corporate philosophy, ‘Rise’. M&M’s ambitions then were defined by its global dreams and big bets, which remained the company’s strategies for a while. However, a decade later, as those bets began to weigh on performance, a different kind of leadership emerged. Under Anish Shah, the company reinterpreted ‘Rise’ as disciplined growth and knowing when to walk away.

Shah will complete five years as M&M’s Group CEO & Managing Director this April. During his tenure, he has seen the conglomerate through an unforgettable pandemic, confronted several business challenges, and eventually put it on a solid growth path.

It is the first time that a non-family member has occupied the corner office at M&M. “Therefore, it was very important to plan that process very carefully,” says Shah. This year, BT-PwC India’s Best CEOs has awarded Shah for his contribution to M&M’s growth story.

A key part of the M&M conglomerate is the automotive and farm equipment business. Reflecting on the last few years, Shah says the group’s core businesses were in good shape. “However, investments made in SsangYong and a few international entities were an issue and contributed to a large chunk of the losses. It meant that whatever we made in our businesses was effectively being taken away by the losses,” he explains.

M&M acquired a controlling stake in SsangYong for $464 million. It struggled for years with the asset. When Shah made a presentation to the board on the way forward, one member said, “There is no need for a discussion because it has made profits only in one quarter. Plus, there is no clear path to the future.”

For the conglomerate, it was a large business, but efficient capital allocation overrode everything else. In mid-2023, SsangYong was finally picked up by Korea’s KG Group. “A lot of people tracking the company did not actually believe we would exit this business,” points out Shah. The overall approach within the conglomerate was now devoid of complexity—businesses contributing to losses needed to be looked at very closely. “We had literally 15 exits in about 18 months. That really set us up for a very different path,” outlines Shah.

Just a few months after assuming charge, Shah wanted to lay down goals that had to be achieved. The question was about whether that should be shared publicly. “We had a healthy debate within the organisation and decided to state it,” he says. The target was 18% return on equity (RoE) and 15-20% earnings-per-share growth every year. Contrast that to the highest-ever RoE of 13.4% before that, and a much lower 4.4% in FY21. The RoE target was met 18 months later, and Shah, not surprisingly, looks at that as “a huge turning point.”

Achieving one target boosted confidence, and thus was born the ‘Think Big’ theme. It was time to look at a few segments and figure out “a way to do very well.” Within SUVs, the authentic SUV was the chosen one. By then, Mahindra had done both compact and multi-purpose vehicles. It resulted in XUV700, a product Shah describes as one-fourth of what a BMW X5 costs. “It was a great example of thinking big.”

Deven R. Choksey, Chairman and MD of investment advisory firm DRChoksey Finserv, views Mahindra’s automotive business as one that has met the aspirations of the new, young buyers. “A lot of time has gone into understanding areas related to looks and styling apart from getting it right on engineering,” he says. To him, offering good products that are value for money has worked. “Overall, getting in a well-designed vehicle has given them a differentiator to play with in the market.”

To take that point one step further, Shah narrates how digital marketing became a big part of the marketing strategy, with short videos being pushed out. The first set of numbers saw over 30 million views. “We were asking ourselves if we missed a decimal point somewhere,” he says. According to him, it was important to do the few key things well. “The seeds were sown around think big, do less and execute flawlessly. We clearly developed a lot of confidence in the first couple of years.”

That effort appears to have paid off. Last April, M&M picked up a 59% stake in SML Isuzu to establish a strong presence in the

The premiumisation of India’s auto sector has been ongoing for a while. Choksey thinks it is not a new theme for M&M. “What they have done well is a clear focus on affordable pricing like Maruti, picked out lessons in style from the Koreans and learnt engineering from the Germans. In the process, a solid moat has been created,” he says.

Specifically, in the EV strategy, the BE 6 and XEV 9E variants are “distinctly different” in terms of style and tech-friendliness for the end consumer. “It gives a premium feeling at the end of it,” he says.

For Shah, it all starts with an outstanding product that customers want to own. “Our product development, design and sourcing teams have come together to create a strong product. From a price standpoint, too, it is important to be competitive,” he says.

Meanwhile, the tractor business, where M&M is the clear market leader, continues to grow on a large base. “They have been extremely agile at a time when significantly large players are absent,” says Choksey. An ICICI Direct report after the company’s third quarter results describes the farm equipment segment (tractors) performance as stellar, with tractor volumes up 23% on a year-on-year basis and margins improving around 50 basis points quarter-on-quarter, “underscoring the company’s strong pricing discipline and market leadership.”

Shah is now gearing up for the next phase, which will be different. Past learnings will surely matter and hopefully be put to even more effective use. How it does that could well determine the contours of the future.  

@krishnagopalan