scorecardresearch

Anand Mahindra on company's transformation and management

The vice-chairman and MD of Mahindra and Mahindra says joint ventures worked out very well.

Anand Mahindra Anand Mahindra
The view from the top floor at Mahindra's corporate headquarters in Worli has changed dramatically over the past few years, as 40 to 50 storey skyscrapers rise in what was once Mumbai's mill district. The skyline's transformation from smokestacks to glass and steel is akin to the changes that Anand Mahindra has driven in the company that bears his family name. He speaks to Business Today's Kushan Mitra on transformation, change and management. Edited excerpts:

On the challenges 20 years ago and today, and whether M&M is spread too thin
I would be lying through my teeth if I said that I came in, knelt down and God told me what the company would be like. That was the time of the most turmoil for Mahindra & Mahindra. The vehicle market was going through a prolonged recession both in trucks and in our (utility) vehicles, productivity was abysmal, there was a culture of complacency and the writing was on the wall. The message I wanted to send out was that there was no free lunch anymore... Honestly, I was worried if the company would survive for one year, let alone 20. You asked if we are spreading ourselves too thin, but when you have been at death's door, you naturally tend to be less intimidated by challenges.

On the joint ventures with Ford and Renault

The fact is that the joint ventures worked out very well for us.... We looked at them as learning opportunities... to acquire current technology. I had done my MBA and had enough data points to know that 50:50 joint-ventures do not work. I told the Ford guys that this is what we want out of this. That is why we insisted that the Scorpio be made at Nashik initially. The 300 people who actually assembled the (Ford) Escort are the people who assembled the first Scorpio because they knew how to assemble a modern car.

With Renault, we actually negotiated an end-point. We said that it might go earlier... You have to understand that the JV is an instrument of growth. When multinational companies go into a country, what do they use a JV for? They use it as a point of entry, sometimes around barriers, as a point of learning also.

On entry into two-wheelers

Michael Porter says the most defensible strategy is not where you do one thing well. The most defensible strategy is where you do many things and the combination of those many things becomes very hard for a competitor to emulate... The key is not core competence but differentiation.

What we are creating is a mobility activity system that becomes very, very difficult to emulate and almost impregnable. So, let's put a word - 'Fortress Mahindra'; and interestingly this is a term that C.K. Prahalad gave us, I met him once in Michigan and he said: "I know what you are trying to do, you are trying to create 'Fortress Mahindra.'" Fortress Mahindra means that if you go into a certain mobility business where you can share procurement, where you can share R&D synergies, where you can share logistics, where you can share brand, you can share channel and then create a mobility web. So, of course, it is going to be a challenge to enter the two-wheeler business but if anybody can do it, it is us. We have a channel, and I'm not just talking of the automotive channel, but also the tractor channel. The growth is in rural markets and M&M has amazing brand equity there. The Scorpio - why do you think our sales are holding up when everybody else's is down? Rural consumption.

On the Indian economy right now

I believe India has a shot in this current maelstrom of standing out and in fact living up to this wonderful goal of being an alternative engine of growth for the world.

On India's reasons for standing out
When I met the Finance Minister recently, the newspapers (had) all said that the monsoons were 25 per cent below normal... I told him I did not follow the media reports because they tend to give aggregate numbers. We have a crop efficiency index that is given to me by Mahindra Finance based on data collected by their 500 branches across the country, and I told him that the reports said that the monsoon was above average. Since then, rainfall has gone up and grudgingly people are saying that it is a terrific monsoon.

Inflation and the interest rates are going to bite, indeed have bitten already and are creating a bit of a brake on the economy. But I believe if the Indian government invests in infrastructure today, it will create growth in a global desert.

One bugbear of the Indian economy was oil. But now that one Achilles' heel is also being mitigated. So I think if the government is now proactive, if it announces some reforms that are much needed, it will signal to the world that the momentum is continuing here. My hunch is that India will stand out quite sharply.

Full transcript of the interview at www.businesstoday.in/anandmahindra