'Do less, but do it well,' says Anish Shah, MD & CEO of the Mahindra Group

Anish Shah, the 53-year-old Managing Director and CEO of the Mahindra Group, is known for his razor-sharp focus and decision-making skills. Shah, who joined the group in 2014, is already making a big difference to Mahindra and Mahindra’s (M&M) auto business (that contributes the biggest chunk to the group’s top line). He has been instrumental in driving the overall strategic pathway for the Anand Mahindracontrolled conglomerate since being elevated to the post in April 2021.

The IIM Ahmedabad alumnus—who had two stints with GE Capital for a total of 14 years across countries—started his professional career with Citibank, before working with Bain & Company. Shah, who has a PhD in Management from Carnegie Mellon University’s Tepper School of Business, also had a stint with Bank of America.

Shah’s rich experience has helped him demonstrate an uncanny ability to guide the organisation towards long-term growth. In FY23, the group posted revenues of Rs 1.75 lakh crore, while M&M had revenues of Rs 1.21 lakh crore. In an interaction with Business Today, Shah talks about his plans to grow core and non-core businesses, his management philosophy and a broader growth strategy. Edited excerpts:

After you took over as MD & CEO, what was your thinking on how you wanted to drive change at the group?

We have to be very careful about what we change and what we don’t. It’s very easy for a new leader to come in and change things. We said that our purpose, ‘Rise’ [the group’s articulated purpose is based on equality, sustainability and ethics] is timeless. We may contemporise it in terms of how we articulate it, but... our values are constant, they are not going to change. Our culture is a very good mix of being friendly and performance-oriented; that is not going to change. What will change is financial discipline in how we drive our decisions and that also goes back to our core operating philosophy. We’ve had leaders in the past like Bharat Doshi [former Executive Director & Group CFO of M&M] who had very strong financial discipline and created value for us for many years. Our focus is going to be on talent and how we nurture leaders internally. We have set a target to ensure that 90 per cent of new hires in leadership roles are from within the group. What is also going to change is a focus on diversity because having a diverse set of people and building an inclusive culture is good for business. In many ways, I look at myself as a custodian of our brand, of our values. We’re taking into the future, things that have worked well for us in the past. This approach has been successful so far because we recognise the strength in what our leaders have built over time.

What’s the broader vision for the group? Are things looking good now that you’ve just crossed Rs 10,000 crore in profits?

We’re a purpose-driven company but along with our purpose, we’ve been able to create value for our shareholders as well. So it’s a combination of being able to do both. I would also like to highlight that we made specific commitments over the past three years and we’ve exceeded every single one of them. And that’s something that we want to continue doing as we go forward. We’ve doubled profits in the past three years. But more important than profits, I think we’ve built on the strong foundation that we had in the past. So I think that Mahindra is living up to everything it stands for. I’d give a lot of credit to what we’ve inherited. For 17 years [from] 2002 to 2018, Mahindra was the best-performing stock in the Nifty and then we sort of had gone below for some time. But now we’re back to being the bestperforming stock. In terms of the vision for the group going forward, the first is to continue living our purpose. Second is to be a tech leader in every industry that we are in and therefore to be future ready from that standpoint. And third, is to create value for our shareholders. So those are the three elements of what we call our strategic imperatives.

What does it mean for your businesses?

When we look at our journey from three years ago, we started with a focus on capital allocation and financial discipline. The first year, we did a lot of that and therefore at the end of the first year, we pivoted to growth. Now we’re going to really drive growth in our businesses by transforming our core which is auto, farm, Mahindra Finance and Tech Mahindra. Transforming the core was really about getting each of those businesses to be a successful leader in its space. And second, by creating growth gems—which we defined as companies with the potential and a plan to get to a market capitalisation of $1 billion in three to five years.

When we think about the next three years, it’s about how we deliver scale. We will deliver scale by capitalising on market leadership that we have in auto and farm, by unlocking the full potential of Mahindra Finance and Tech Mahindra, and achieving a 5x growth in our growth gems in five to seven years. We have set the bar higher as we believe we have the ability to do that.

If we can have our auto business deliver products that are outstanding, and we can get a huge demand for them, why can’t we do that across all our businesses? Susten [a solar power producer], which was one of our growth gems, has a 5x growth plan already. Last Mile Mobility has a plan to grow 5x in two years. And both these businesses have external marquee investors who have invested with the valuation based on these plans. If some of our growth gems can grow 5x, why can’t all the others?

You plan to list some of your growth gems. How is that progressing?

That is still on track... In Susten, for example, we are listing the InvIT (infrastructure investment trust), because that is where most of the capital is going to be. Therefore, Susten will be the first to move to value creation. And we will continue to look at similar opportunities for other growth gems. That is what will unlock shareholder value. And the other way is by bringing [new] investors in. It’s a combination of both of those things.

We see tremendous potential across many of our businesses right now. In the short term, I see the maximum potential in Mahindra Finance because we have a much lower price to book than others, and [it] is sort of undervalued, in that sense; this is a very good franchise that we can grow. Beyond that, I would just look at all our growth gems. Which business gets there faster will depend on execution... Our real estate business has the ability to do joint development with many partners—and we’ll be able to deliver great products there. We have delivered for value creation if we can achieve 5x growth in our growth gems.

Can we call it your derisking strategy because of how you’ve invested in different sectors and identified your growth gems?

Our foray into the services businesses was never thought of as de-risking, but it was part of the DNA to say, ‘here is where opportunities lie, and this is what we’re going to do as a result.’ As we think of 5x growth for many of them going forward and significant growth for Tech Mahindra and Mahindra Finance—that will continue to create enormous value—we think of it more as a value creation approach in areas that we’re good in.

What does Mahindra have that someone else in hospitality or logistics or real estate may not have? One is, we have a brand that creates a lot of trust with shareholders, which we haven’t fully leveraged in many cases. And the second thing we have is synergies within our businesses. Many of our services businesses have grown from our key businesses. Mahindra Finance is a classic example; the logistics business is another example. That synergy is getting even stronger now as we bring the group together to do a lot of things. We made collaboration a minimum requirement for any leader and that has reaped significant dividends.

With the group as diversified as it is today, how much of a challenge is capital allocation?

What we found is if we deliver results, there is no dearth of capital. We’ve raised capital without any formal fundraising. We did not appoint investment bankers... we didn’t say that we wanted to raise funds. Our approach has been that we need marquee partners; and we get to bring them in only if they add value and there’s a long-term partnership with it.

Therefore, we don’t need funds—we have a very large amount of cash on the balance sheet right now. So, none of these investments were made because we needed funds, it was because we felt they could add value and grow our businesses. And in some cases, external validation is important. We’ve been very selective about who we bring in. As long as we continue delivering on what we committed to, we will have investors willing to invest in us. If we focus on that, there’s no dearth of capital. The minute we stop delivering, everybody will start asking questions.

So our approach is very clear: make bold commitments, but make commitments that you can deliver on. Do less, but do it well.

Can you give us an example of doing less but doing it well?

Let’s start with the auto business. We focussed on our core, that is authentic SUVs, with the aim of being the No. 1 SUV player. The result? Our SUV market share grew from 13.6 per cent in FY21 to 19.1 per cent in FY23. That 19.1 per cent should go much higher. As you think about Born Electric SUVs, we will be No.1 in that space by far. So that’s one example of focus.

Second, let us look at the overseas markets. 

If we have made it big in India, [then] we have the ability to be successful in international markets as well. We’re going to start with phase I, where we are looking at three markets: Australia, South Africa and Chile. Can we get to a high market share in these three markets? And then once we do that, we’ll look at phase II beyond them. So pick specific things but do them in a big way.

Does it help that you have a consulting background that allows you to see the bigger picture?

That has definitely helped. The ability to see the bigger picture helps but as a leader it’s also the ability to know when to get into details and when to step back and let others go into them. The ability to trust leaders, drive accountability, take hard decisions and stay firm on them, in the interest of business, is important. Setting a high bar for delivery and being able to maintain it has helped a lot.

Your global strategy has been measured. How does one pick up on slots in a global market?

For a global strategy or [global] acquisitions, the most important thing is understanding the objective: Why are we doing this? And then equally important, is the ability to deliver what we have said we will do... And often, if I were to look at the history of companies over time, there were some things done because they sounded very exciting or very appealing. The discipline comes in asking, ‘Is it core to our strategy? Is it something that’s going to help us? And is this something we’re going to deliver on?’ One term that we use with the board is that we have earned the right to dream big. So, have the discipline that even as you dream big, deliver on what you have been dreaming about.

@PLidhoo