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Post July 1991 Reforms
Troubles
Striking workers of the Kandivali factory of Mahindra & Mahindra, or M&M, in Mumbai
had gheraoed him in his plant office and were baying for his blood. Mahindra, then 36 and
deputy managing director of a company known for its tractors and the Jeep, had said there
would be no Diwali bonus unless workers stepped up productivity. Mahindra's ordeal lasted
for nearly four hours, before the workers calmed down. Mahindra held his ground and the
workers yielded, agreeing to increase productivity.
The 1,230-odd workers at the engine factory in Igatpuri, 125 km northeast of Mumbai, who
had decided not to make more than 70 units a day even if this left them enough time to play
cards, also gave in.
Three years later, around half that number were churning out 125 engines a day.
"Productivity gains ranged from 50 to 150 per cent," recalls Bharat Doshi, Group Chief
Financial Officer, who has been with the group longer than his boss.
Growth Of Mahindra
Today, Mahindra does not worry as much about productivity as about what his next big
project will be. Another passenger car, a sports utility vehicle, a truck - or an aircraft? Twenty
Diwalis since that day in 1991, the group's businesses span all these - and holiday resorts,
financial services and defence.
Mahindra's goal seems to be global leadership for his group, which in 2010/11
reported a net profit of over Rs 4,800 crore on sales of nearly Rs 37,000 crore. In 1991,
group revenues are estimated to have been around Rs 1,520 crore, based on a Prowess
database search of group companies.

Keenly watching him will be the stock market, which has pushed up his flagship M&M's
stock price by 995 per cent since Mahindra took charge, despite two stock splits since
2005. In the same period, the Bombay Stock Exchange's 30-share Sensex, which
includes M&M, has risen 794 per cent.
Takeover and Acquisitions
he buys a company, as he did with the Reva electric car.
he has acquired Punjab Tractors (doubling M&M's share of the tractor market and making it a
global leader),
Satyam Computer Services,
two-wheeler maker Kinetic,
South Korea's automaker Ssangyong.
Failed Partnerships
In 1995, hungry for partnership with a multinational that would bring in much-needed
technology and management expertise, his group tied up with Ford Motor of the US but the
venture petered out in a few years after its first car, the Escort, flopped.
M&M's venture with Illinois, US-based Navistar International has not gained traction
because of delays in rolling out medium and heavy commercial vehicles and the competition
from new, low-cost rivals such as AMW, the Gujarat-based truckmaker. Mahindra Navistar
reported a loss of Rs 186 crore last year
A bigger setback for M&M has been the Logan, a mid-size sedan that is the offspring of its
venture with France's Renault. The car flopped and the partners parted ways after four years
of friction.
M&M is selling the remaining units as its Verito, while Renault is trying to make its mark in
a higher segment with Fluence
M&M's big non-auto joint venture, the one with British Telecom in software services, forged
before Mahindra Ford, had a reasonable run before BT reduced its stake in 2010 to around 30
per cent.
Anand Mahindra Says
"Everybody enters a joint venture with a what's-in-it-for-you-and-what's-in-it-for-me
attitude," "[Before the venture with Ford] we had no experience in making a hard-top
vehicle, or in modern methods of manufacturing." And then he drops the punch line: "The
300 people who put the Ford Escort together were the first ones to work on the Scorpio. It
can be argued that we would not have been able to make the Scorpio without the Ford joint
venture."

Scorpio Project-2002
Pawan Goenka, who had come from General Motors in 1993 as General Manager for
Research and Development but was on the verge of leaving.

Goenka, a specialist in engine technologies, was riveted by the audacious plan to develop a
vehicle from scratch in India and bought into Mahindra's dream. He spent the next few years
learning other parts of automotive technology and building a team of skilled young
engineers.

In 2002, the Scorpio was born at a total project cost of Rs 550 crore.






Remarkable things about it.
First, Indian companies were not known to develop their own vehicles.
Second, it was developed at a tenth of the cost that a large manufacturer would have
incurred.
And, the Scorpio has become a platform, first for the Xylo in 2009 and then for the
XUV5OO, slated for launch in India and South Africa later this year.
Mahindra acquisitions

2007
In July, M&M buys 64.6 per cent of Punjab Tractors for about Rs 1,400 crore. Retains
the Swaraj brand and turns the company around in two years. In 2008/09, just before it
is merged with M&M, Punjab Tractors reports a profi t of Rs 200 crore. The Swaraj brand
has increased its marketshare from nine per cent in 2007 to 12 per cent today. Overall,
M&M had 42 per cent of India's tractor market in 2010/11.

Selling over 202,000 tractors a year, it is the world's largest tractor company by volume.
Farm equipment is the single largest contributor to M&M's revenues.

2008
M&M buys an 80 per cent stake in Kinetic Motors' two-wheeler business for Rs 110
crore. This is run as a separate company - Mahindra 2 Wheelers. In 2010/11, the
company had 7.6 per cent of the scooters market, against 4.8 per cent the year earlier.
Motorcycle sales have been poor, but Mahindra 2 Wheelers is the fi rst Indian company
to take part in the MotoGP motorcycle racing series and has enjoyed some success in
the 125cc category with riders Marcel Schrotter and Danny Webb.

2009
Tech Mahindra, which began life as a venture with British Telecom and later became
the information technology business of the M&M Group, buys Satyam Computer
Services in June 2009 when the government puts Satyam on the block following
revelations of an accounting fraud committed by its Founder-Chairman B. Ramalinga
Raju. Tech Mahindra pays an estimated Rs 2,650 crore for a 51 per cent stake.
Rebranded as Mahindra-Satyam, the new company declares a consolidated net profi t of
Rs 225.2 crore for the April-June quarter of 2011/12, its fi rst since the takeover.

May 2010
Mahindra buys a 55.2 per cent stake in Reva Electric Car Co, most of it from Reva's
(in the pic) promoter. It also brings in fresh equity. Even though Mahindra-Reva made a
loss of Rs 28 crore in 2010/11, Pawan Goenka, President of M&M Automotive, feels that
M&M will benefi t in the long run from Reva's electric vehicle technology, and the
acquisition will revive M&M's own alternative propulsion projects. Mahindra-Reva plans
to launch a new vehicle, NXR, soon.

November 2010
M&M acquires a 70 per cent stake in South Korea's Ssangyong Motor Co for about Rs
2,100 crore, including bonds. It is the largest outbound deal by M&M, which now plans to
introduce Ssangyong vehicles in India in 2012, develop vehicles jointly, as well as use
Ssangyong's marketing and distribution reach in Russia, Latin America and Western
Europe to realise its ambitions of becoming a global major. Ssangyong closed the 2010
Jan-Dec fi nancial year with a net loss of Rs 220 crore.

Other acquisitions
Mahindra Systech has been acquiring automotive component and aerospace companies
aggressively since 2003. Several were privately held fi rms and no values were given.
Among them: Schoneweiss (axle-beam manufacturer, Germany); Jeco Holding
(forgings, Germany); DGP Hinoday Industries (castings and ferrites, India); Falkenroth
(forgings, Germany); Stokes Group (forgings, Britain); Amforge Industries (forgings,
India); Plexion Technologies (engineering services, India); Metalcastello (castings, Italy
along with ICICI Venture); SAR Transmissions (gears, India); Engines Engineering
(automotive, Italy); Gippsland Aeronautics and Aerostaff Aircraft Manufacturing
(aerospace, Australia).
Transformation at SSangyong
The really big bet at M&M is being played out in Seoul. China's Shanghai Automotive
Industry Corporation, or SAIC, had acquired 49 per cent equity in South Korea's
Ssangyong in 2004. But sales collapsed as fuel prices shot up, emission standards in its
export markets became stringent, and the global financial crisis erupted.

Faced with strikes and unable to cut costs, Ssangyong filed for bankruptcy in January
2009. SAIC diluted its holding to 3.79 per cent in July next year. When M&M first
announced its intent to acquire Ssangyong, it was not without reason that its shares fell.
But unlike Tata Motors' acquisition of Britain's Jaguar Land Rover, or JLR, in 2008,
which took time to turn operationally profitable and left Tata with a pile of debt, the
Ssangyong deal was smooth.

The target was free of debt, its operations profitable and it trimmed its workforce
before M&M came in. And M&M paid $463 million - some 60 per cent less than what
SAIC had paid in 2004.

Now, Mahindra's task is to win over the unions. "We have appointed only six people
from here in management roles in Korea, and the chief financial officer is the only top
Indian executive," says Goenka. The idea is to get the Ssanyong employees to believe in
themselves. Of the 120,000 vehicles Ssangyong produced last year, 65 per cent were
exported. But it is not just entry into new global markets, M&M will also develop all
major platforms in the future with Ssangyong and plans to start selling products from
South Korea in the Indian market next year.




Satyam Transformation
Tech Mahindra, the Mahindra-BT joint venture, won Satyam in an auction by the
government, which had taken control after Founder and Chairman Ramalinga Raju was
accused of overstating key financial numbers. Mahindra had actually reached out to
Raju just weeks before the scandal broke. "He did not respond," he says, tongue in
cheek, "for now very-well-known reasons."

We took difficult decisions at Satyam but we made sure that everybody was kept informed: Rajeev Dubey
Apart from dealing with tax issues, handling employee morale at Satyam was the
biggest challenge. As Rajeev Dubey, M&M's head of Human Resources, says, Satyam
employees had no idea what the future was going to be. "Yes, we had to take some
difficult decisions, but we made sure that everybody was kept informed; communication
was vital." No one will talk about it, but the next step in harvesting synergies among the
Mahindra group tech businesses is to combine Tech Mahindra and Mahindra Satyam in
the future.

A management consultant who has worked with Mahindra closely says he has not seen
an Indian businessman with "a better left brain, right brain" combination - creativity in
business combined with a feel for numbers. In 2000, when Indian groups started buying
global assets, the Mahindra group was much smaller, with revenues of about $1 billion.
"Not only was he smaller than the Tatas or Birlas, his family's shareholding in group
businesses was relatively low making him more vulnerable than them," says the
consultant. The consultant, who works at a US management firm, requested he not be
named.

This explains the heightened sense of caution with which M&M goes after acquisitions,
especially those with a higher degree of risk or of a size that may be difficult to digest.
Mahindra Strategy
A strategy Mahindra uses to pare risk is to rope in private equity, as in M&M's
acquisition of Italian auto component maker Metalcastello along with ICICI
Venture. So too, it acquired Australian airplane maker GippsAero along with Kotak
Private Equity.

A takeover tycoon he may be, but Mahindra is not done with entering new areas
on his own. Looking at the promise in defence equipment, M&M has developed an
urban patrol vehicle, the Marksman, based on the Scorpio. Kutub Hai, a former
Brigadier, who is the Chief Executive of Mahindra Land Defence Systems, a joint
venture with British Aerospace, says the company can hope to get up to 20 per
cent of the $100 billion defence market in the coming decade.





Mahindra Rise
n mid-2009, Scott Goodson, the founder and creative head of StrawberryFrog, a
boutique American advertising agency, met Anand Mahindra in Mumbai. Mahindra
had appointed Global Vehicles as distributor for its Scorpio sports utility vehicle in the
United States, and Global had roped in StrawberryFrog.

Goodson, who specialises in 'movement marketing', wanted to understand what
Mahindra & Mahindra was all about. He had been surprised by what he found. Most
Mahindra's managers, he noted, felt they were working for a higher purpose but
seemed unable to articulate it. Goodson told Mahindra boldly, "You yourself do not
understand what kind of company you are running."

Following months of research and interviews with all stakeholders, the 'Rise' slogan was
born. It emphasised three core principles - accept no limits, think alternatively and
drive positive change.

But Mahindra wanted this to be more than an advertising campaign. "Our core
purpose earlier was to prove that Indians are second to none," he says. But later M&M,
having acquired thousands of employees in Germany, Korea, China and elsewhere,
needed to redefine this.

Mahindra admits that not every employee will buy the 'Rise' idea. Surprisingly,
employees of Mahindra-Satyam were the biggest supporters of 'Rise', presumably
because they had suffered a serious identity crisis when their company's founder
perpetrated a scam.

Ironically, Mahindra's plans for a US launch were scuppered by legal issues with
Global Vehicles. So while StrawberryFrog never got around to doing the advertisement
it was intended to do in the US, it has done a massive campaign in India.








Mahindra The Man
Mahindra's 360-degree view of life - he has 350,000-plus followers on Twitter and adds
2,500 every week - had management thinker C.K. Prahalad, about a year before he died
in April 2010, dub his sprawl of businesses 'Fortress Mahindra', an empire that spans not
just a hundred countries but has valuable links in multiple industries.

Despite aggressively expanding the contours of his conglomerate - he prefers to call it a
federation - Mahindra, now 56, makes you feel that he has not really forgotten the day
he was confined to his office 20 years ago. "When you have stared down the abyss, you
get a sort of confidence," he says.
The story of Scorpio, M&M's big-selling utility vehicle, is now a case study at Harvard
Business School, where Mahindra did his MBA in 1981. (He had majored in film-making
and photography from the same university.)