Anand Mahindra, Chairman of the Mahindra Group, sent out a clear message at the company’s 77th annual general meeting in Mumbai on Friday that the two magic mantras for M&M in the immediate future are scale and synergy.
“We have identified the four main business areas and the nine other businesses with high growth potential. The first objective now is scale, scale and more scale,” he reiterated.
Each of the company’s growth gems has taken up the 5X challenge - “our businesses have to grow 5X in the next 5 to 7 years from where they are today in terms of market cap”. Mahindra said he was confident that the next few years would see an astounding pace of growth.
The Group, he continued, has another Brahmastra - a secret weapon - and that is the power of synergy. “Our unique federated structure empowers every business to pursue its own growth goals while freely drawing upon synergies that arise from companies all working in collaboration with each other,” said Mahindra.
Synergies of scale, synergies of purchase, synergies of customer bases, synergies of technology - all these “positively impact” the bottom line. With scale and synergy as the goalposts combined with clarity of purpose, M&M was all set to pole vault into the future.
Pole Vaulter Imagery
This image of the pole vaulter “really resonates with me” and Mahindra said there was a story behind it. In 2002, the automaker was in a “bad financial trough” and called a group-wide meeting called the Bluechip Conference. “This pole vaulter was the logo of the conference because it symbolised our determination to engage all our energies to soar over our difficulties and achieve business success. And succeed, we did,” the Chairman recalled.
The pole vaulter logo was created in 2002 and he said the metaphor was even more apt in today’s times because India was ready to pole vault. “What does a pole vaulter do? To put it very simply, he takes a run-up to the jumping point. The faster he runs, the more kinetic energy he generates. Then he plants the pole firmly into a box embedded at the foot of the jumping point,” explained Mahindra.
The firmness with which he plants the pole in the box is crucial to success. Then, using the help of the pole, he jumps, converting the kinetic energy into potential gravitational energy to clear the bar and land successfully on the other side.
According to Mahindra, multiple factors needed to converge for a successful pole vault. The run-up must be at the right speed; the pole has to be firmly planted, the kick-off needs to be perfect. There have been times in the past when India has “appeared to be on the verge” of a successful pole vault. But somehow or the other, everything did not converge, and “we disappointed a watching world”.
India On A Roll
Today, however, all the positive factors are converging. The country, he said, was well into the run-up. The Indian economy was growing at 7 % when many countries are heading for recession.
Geopolitical tensions with China are pushing many manufacturers in India’s direction. “But that is not the only reason. Economics also enters into it. India actually has the cheapest manufacturing costs in the world. It is not surprising that, of late, companies of the stature of Apple, Samsung, Boeing, and Toshiba have shifted a significant amount of their manufacturing activity to India,” said Mahindra.
And it’s not just the Western nations, he added. “Would it surprise you to know that the second largest investor in India is Singapore? We are within pole-vaulting distance of being able to replace China as the factory to the world,” he told shareholders.
Suspicions of China’s ambitions and post-COVID supply chain disruptions have also worked in India’s favour. And “we are well placed” to take advantage of this. The country had “massively improved” its performance on the World Bank's Logistic Performance Index and the thrust on infrastructure was paying off.
Mahindra said the world functioned digitally today and India was in an enviable position on digital infrastructure. The cost of 1 GB of mobile data was the cheapest among major economies as was the cost of mobile internet. “We are 73 times cheaper than South Korea, which has the highest cost of mobile data among major economies. I believe India is generating enough kinetic energy for a spectacular pole vault takeoff,” he reiterated.
Buffer To China
The next step in the pole vault was using “box to its fullest advantage and our box is our increasing stature on the world stage”. The world, according to him, is at a stage where China’s political ambitions are being viewed with alarm and India is seen as an obvious buffer and counterbalance to China. “There are many countries wooing us today,” said Mahindra.
He termed India’s foreign policy “outstanding” and said it had handled the Ukraine crisis well. “We are one of the few nations whose economy and oil supplies are not affected and we have pulled off the trick of being seen as a helpful and neutral party,” said Mahindra.
Leadership of the G20 “has amplified our voice” in the climate change and environment scenario and the country is now more respected internationally than ever before.
The third stage in pole vaulting was the take-off, using the strength of the pole. “Our pole is our democracy, raucous, chaotic, and vibrant. Democracy is the pole that will convert the kinetic energy of 1.3 billion people into the gravitational energy that we need to vault higher, faster, stronger,” said a confident Mahindra.
The country, he maintained, was ready to pole vault to the top. “India is ready to pole vault, and so is your company. I am optimistic that this year will see the beginning of a new and exciting chapter in our country’s and company’s saga,” he said.
Remembering Keshub Mahindra
He also took time in the beginning of his speech to pay homage to the late Keshub Mahindra, Chairman Emeritus, who passed away earlier this year. “I personally have lost a beloved family member, a mentor and a guide. Your company has lost its last link with the early years of our founding, and an iconic figure who personified everything that the Mahindra Group stands for,” said Mahindra.
Keshub Mahindra, he continued, had acumen and vision - on his watch, M&M grew from a tractor and automobile manufacturer into a diversified and global federation. He cared for people and he believed that people would give of their best when they were happy in their work. And above all, he had a firm commitment to values and integrity. “We shall not see his like again,” he said.
Keshub Mahindra was also the last living link with the early days of M&M. “Indeed, he was the torch bearer of a precedent that had been set right at the time of the founding of M&M in 1945. Today there is a lot of talk about the necessity for a company to have a purpose. Companies go to great lengths to find and articulate a purpose,” said Mahindra.
Being perceived as a company with values, integrity and purpose, also gave M&M “solid” business advantages in terms of attracting the right partners, particularly from countries with strict laws against corrupt practices. “From the early days of partnering with Willys Jeeps to our latest international partners (OTPP, BII, IFC), we have always partnered with marquee names in international business because of our impeccable reputation,” he said.
As Mahindra put it, managers value working for a company that never asks them to go against their conscience. 'And young people find it inspiring to work for a company that seeks to add value to society as well as itself,' he declared.
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