When Anish Shah, the new boss at the $19-billion Mahindra group, presented his 100-day plan to the company board, everyone sat up. Typically, when new CEOs present a 100-day plan, it’s around stuff like understanding the company, getting deeper insights into the financials, and building the team. Shah, who is set to become the first professional MD and CEO of the Mahindra Group, however, offered a transformational plan. For Shah, who joined the conglomerate in 2015 as President of its special projects, much of the groundwork had already been done over the past year — ever since he got to know that he would be succeeding Anand Mahindra.

“In 2019, after I came to know I would be leading the group from November 2021, we laid out a very detailed transformation plan, one that has helped tremendously because, over the last year, we could get a lot of things done. A lot of tough decisions have been taken already, including exiting businesses that were not accruing value. Now it is more about a growth strategy, it’s time to start getting to core execution,” says Shah, who till recently was the Group Chief Financial Officer.


Anish Shah, MD and CEO, Mahindra Group


Three-pronged strategy

The transformation plan is three-pronged. The first is to drive growth through innovation in the group’s four core businesses — automobile, farm equipment, finance, and IT services — which account for the majority of its revenues. Shah’s plan is to scale them up further but without spreading too thin. In the auto segment, for instance, the focus will now be mostly on SUVs.

In the past, Mahindra & Mahindra had moved into multiple segments and geographies, some of which became a drag on its performance. For example, its venture into the sedan segment with French carmaker Renault failed to capture consumer imagination. Similarly, the acquisition of a majority stake in Korean brand SsangYong dented M&M’s profits over the last few years, forcing it to let go of the venture. “Maybe we did too many things. Maybe we would have decided not to do a couple of things and be able to do the things that we did a little better. And, in some sense, that’s what we’re doing now by getting out from a few things and being closer to our core, and ensuring that we are able to do justice to these things,” says Pawan Goenka, who recently retired as the Managing Director of M&M.

In the finance space, Shah is looking at multiple things — from taking a full-fledged banking licence to sharpening Mahindra Finance’s focus on digital payment. “We’ve set up a separate vertical that’s focused on digital. And we’ve got one of our top leaders, who has come in from Goldman Sachs, to run that. We are building a very strong team in that space. So this vertical will look at all of the potential opportunities in the banking space, and also look at positioning Mahindra Finance much better in the digital payments space,” says Shah.

The second part of the growth strategy is around 10 companies within the group across sectors such as mobility, clean energy, infrastructure, rural financing, and technology. These companies have a combined revenue of ₹10,000 crore, with many of them profitable and generating cash today, as also well positioned to scale up. Shah plans to publicly list some of these companies over a 2-5 year period. “We need to get to a certain size before we get to IPO. So our focus is on the scaling of the businesses,” he says.

The third part of the plan is to establish new-age platforms. Mahindra already has investments in multiple online businesses including FirstCry, an online store for kids and newborn babies; SmartShift, a marketplace for intracity logistics; and First Choice, for buying and selling used cars. The company is looking at entering online healthcare, insurance, and a platform for farmers. But unlike other conglomerates like the Tata Group and Reliance Industries that are building a super-app platform to host all their digital products and services, Mahindra is looking at creating separate businesses from each digital property.

“Our approach is to play in ecosystems and create platforms for those ecosystems. We’re not sure whether a platform across the board will work or not. We need to have a clear right to win in the space we are in, a clear ability to execute in that space. We’re going to leverage technology to create a quantum jump in terms of how we serve our customers,” says Shah.

Fiscal discipline

At the centre of Shah’s three-pronged game plan is financial discipline — ensure an 18 per cent return on equity (RoE) across all business units in the mid-term. “I have told all our companies that they will get fresh capital only if there is a strong value proposition, a strong will to win, the ability to execute, and, therefore, the ability to meet certain financial milestones that provide the right set of returns for our investors. In a sense it’s going back to what Bharat Doshi and Uday Phadke (former Mahindra executives) had put in place. I think we deviated from that in the last few years,” says Shah.

But Shah faces massive headwinds on multiple fronts. He is taking over the mantle at a time when the economy as a whole is reeling from the pandemic. M&M’s sales in April were down nearly 10 per cent to 36,437 vehicles, compared with 40,403 units sold in March 2021. The financial services business has reported a 28 per cent drop in consolidated net profit at ₹780 crore for the full fiscal 2020-21, compared with ₹1,086 crore in 2019-20.

Anuj Kapoor, Assistant Professor of Marketing at IIM-Ahmedabad, said financial discipline will require a mix of entrepreneurial spirit and astute professionalism. “The company needs to balance long-term proposition — that is, investor returns — and short-term proposition — that is, growth,” he says.

Most of the smaller group entities have the potential to grow and add value to the firm in the long term, Kapoor points out. “These firms will ultimately be a part of a digital ecosystem within the Mahindra group — of course, some of them won’t exist in the coming months but, for now, Shah is playing well,” he explains.

Tech Mahindra continues to be one of the bright spots for the group, with a consolidated net profit increase of 9.8 per cent to ₹4,428 crore during FY 2021. But can Tech Mahindra bolster the overall group’s digital ambitions?

Not exactly, feels Faisal Kawoosa, founder of tech research and consulting firm techARC. “Even if these companies leverage tech expertise within the group, the engagement will be as good as any external customer,” he explains. “I would recommend that M&M identifies its D2C (direct-to-consumer) segments and prioritise the areas it should start with. Digital transformation in such complex groups isn’t easy. So it’s better to take smaller steps, stabilise one and then move to the next.”

Shah is aware of the challenges. “The reality of the world today is, it’s never going to be a perfect plan. We’re always going to have something come from some corner of the world that would hit us. But we are well equipped to face them. And, as leaders, that’s what we need to do,” he says.