Anand Mahindra is a man on the move. With Satyam due to announce its restated earnings this calendar year, his push into the manufacturing group’s services business is gathering momentum with insiders estimating that Mahindra Satyam alone will add around a billion dollars to the group’s revenues. In an interview with Yassir A

Pitalwalla, the Mahindra group vice-chairman and managing director explains how he is reshaping the foundations of the business. Excerpts:



What is the target that you have set for your services business now that you have Satyam in your fold?

I have no mental map as to what percentage of our revenues ought to be from services. As a group, we don’t work on numerical targets for revenues. My objective is to maximise entrepreneurship through empowerment of people and leaders in our federation. We have got to be a group where the focus moves away from me.

When leaders have a core purpose and share values and pride in being a part of the Mahindra culture, then financial numbers we believe are an inevitable outcome.

Our manufacturing-oriented businesses, too, are refusing to lie down and play dead. The way they are going, they will be driving the group’s top line and bottom line.

The bedrock of all your businesses has been a manufacturing base. Do you think the group has the DNA to succeed on a much bigger scale in the services business?

We have disproved the folklore that the focus on financial factors alone yields success. We talk about fuzzy factors, values and core purpose. We desire to be entrepreneurs and contribute as Mahindra contributed to post-independent India. Our company was created through idealism when the country needed growth and entrepreneurship. If we do not hone our competitiveness in the services area, we will not be able to mirror the growth in the economy (as the majority of GDP is now being driven by services).

Therefore, we are extending our competencies to areas such as IT, real estate and niche retailing (focussed on products for mothers with young children) and we will also grow our hospitality and after-market businesses such as automartindia. Thus, the services business will show an even higher level of profit once Satyam is consolidated with our group’s financials.

We didn’t have the service competencies when we began, but we developed them as the Indian economy was maturing and learnt and built the knitting.

At Mahindra Satyam, you are way behind established leaders such as TCS, Infosys and Wipro. Do you think the group’s target of being among the top three in any business will be achieved here?

We are seized with the task of fixing the destiny for Tech Mahindra & Mahindra Satyam and how they will become leaders. In everything else, you must remember, we compete in chosen segments.

For instance, at Mahindra & Mahindra Financial Services, we are the biggest rural-focused non-banking financial services company in India, even selling mutual funds and third party housing finance products in rural areas. Our rural reach here is so strong that we are the third largest financiers of Maruti vehicles in India and leaders in rural finance of vehicles for them.

We are the pioneers in the organised multi-brand pre-owned cars business. We are by far larger than anyone else in our space and are getting good traction here too. In fact, the growth numbers in the pre-owned car business are no less than what we are seeing in the original equipment manufacturer market.

At Tech Mahindra, we have become the number one telecom service software provider in the country. We have made investment of a reasonable amount and a material size in Satyam and our ambition clearly is to be number one in this business too. The absence of a public roadmap for us to do this is because it’s competitive information. We know what our strengths are.

Your retail venture doesn’t seem to have taken off in the big-bang way as was perhaps expected…

We went public with Club Mahindra in the 13th year of operations. Our retail business is just about a year old. Yet, it got a debutant retailer award in the industry. We believe we’ve got the fundamentals right and discovered a model that works and you will see this business (Mahindra Retail ) ramp up the ‘Mom & Me’ stores. We know what layout, merchandising, fixtures and locations work. We have the humility to learn enough from the market.

The customer loyalty scores and the consumer feedback that we’ve got here is nothing short of phenomenal.

Your Systech businesses have been under some pressure of late with everal of them running losses. Do you think the inorganic growth strategy here perhaps was ill-advised?

The Systech business was a case of a clean sheet design, which started with no business. The comparative advantage for auto components production is there in India, but we had to get the technology which Indian companies didn’t have. If I had a crystal ball and, therefore, knew acquisitions would have been cheaper a year later, we could have waited, yes.

But remember we never bought anything that was indigestibly large and could’ve put the whole ship in danger. We always acted with the question of whether this can be sustained in a downturn. It plays to a long-term well-defined strategy of a jugalbandi of global technology and the Indian advantage in manufacturing.

In the aerospace business, for instance, customers are focused on being cutting edge and we are designing for the most demanding customers here. Increasingly, these customers are asking us to grow the work done in India.

That’s a jugalbandi that we have because of the acquisitions. You can’t recruit this. At the same time, we have not taken any undue risks. So, we see the Systech business continues to develop on the auto and aerospace platforms.