Prof.

Sham Sharma
M. A. (Lucknow) D. M. M. (London)

THE MAHINDRA GROUP

Leveraging for renewal and growth

The corporate journey of the Mahindra group started in1945 when one of the two brothers K. C.
Mahindra (the other being J. C.) was on a visit to the US. Both were professionals working with Tata
Steel and Martin Burns respectively. KC visualized manufacturing jeeps for the rugged Indian roads.
A Franchisee for assembling Willy Jeep was set up as Mahindra & Mohammad in association with
Malik Ghulam Mohammad who later became Finance Minister in post-independence Pakistan.

In 1948, Mahindra and Mahindra came into being. Keshub Mahindra is the Chairman of the Group
and Anand G Mahindra is the Managing Director at present. The first diversification came in 1953
when Otis Elevator (India) was formed. In 1956 the shares of the Mahindra Group were listed on the
Bombay Stock Exchange.

The decade of 1953-63 saw diversification mainly through collaborations and joint ventures with
foreign companies. The Group entered varnishes and resins, machine tools, sintered products, alloy
and special steel and finally tractors in 1963. Tractors remain a core business at the Mahindra Group
and it is a market leader in the industry and a global player now.

In 1965 came a major thrust into automobile industry with the commencement of production of light
commercial vehicles. The first international foray in the form of exports of utility vehicles and spare
parts started in 1969 when it made the first attempt at geographical diversification for the Group.

The next two decades till 1985 were interspersed with strategic actions aimed at expansion in its
mainline business of tractors. A major diversification occurred in 1986 with the Group entering the
information technology (IT) sector. The milestone of India’s second liberalization, in 1991, coincided
with the Mahindra Group diversifying into financial services.

A reorganization exercise was carried out in 1994, to create six strategic business units (SBUs):
automotive, farm equipment, infrastructure, trade and financial services, IT, and Systech (systems
and technologies). The next five years, till the dawn of 2000, were marked by several related and
unrelated diversification moves into realty and infrastructure, passenger cars, holiday resorts,
consultancy and education. The Group focused on having independent presidents of SBUs who would
focus on their line of business.

By 2001, the Mahindra Group was not really in a good shape financially, with revenues of Rs. 4,352
crores, net profit of Rs. 120 crores and ROCE at 6.9%. That made it embark on a financial
reengineering plan, codenamed Operation Blue Chip involving debt restructuring and defining the
financial criteria that each business in the Group had to meet.
The post-2001 period saw the Group, focusing on internationalization through mergers and
acquisitions and joint ventures. The Group has been operating in several markets around the word in
Europe, Africa, South America, South Asia, South-East Asia and West Asia. Its earlier experience of
having a joint venture with Ford was not pleasant as the car it launched failed to make n impact. But
the Group learned enough by the disaster to make a successful product, Scorpio.

The Mahindra Group today is 70 years old, widely diversified US$ 17 billion Group with 118
subsidiaries, 7 joint ventures and 14 associate companies as of 2014. The gross revenue for the year
ending March 2014 was Rs. 78,736 crores, profit before tax was Rs. 5,502 and net profit at Rs.
4,667 crores. Its businesses span a wide range of sectors, industries and markets including trade
and financial services, automotive technology, information technology, infrastructure development,
and defense systems. Yet, tractors and utility vehicles of its automotive and farm equipment are its
core businesses.

The Mahindra Group has a group strategy office that acts as the internal consulting practice
responsible for brand development and strategy development support to the Group Executive Board
and promotion of best practices and collaboration across the Group companies. Implementation of

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 Prof. Sham Sharma
M. A. (Lucknow) D. M. M. (London)

strategies is done through three ‘war rooms’: operations war room looks at the half yearly
performance of the company, strategy war room where business teams sit together and debate
strategy, and the budget war room looks at the implementation of the strategy. The new corporate
brand, Mahindra Rise is aimed at integrating the various companies in the Group through grant of
autonomy and independence of corporate action as well as reaping the advantages of synergy across
the Group. The guiding philosophy of Mahindra Rise rests on three principles of accepting no limits,
thinking innovatively and driving positive change in the life of others.

Over the years, the Mahindra Group looked at niche’ segments to build businesses adopting what
could be called as “segmented strategy” and has now entered into defense and renewable energy
sectors. The multiple lines of businesses – auto, technology, hospitality, retail, defense and
aerospace, and steel are managed by autonomous presidents. In the last 7 years, the Mahindra
Group has made some 50 acquisitions worth US$ 5 billion, the more prominent ones being Satyam
Computers and South Korean auto maker Ssangyong. The Group is relying on defense, retail,
aerospace, and renewable energy for future growth. The logic behind some of the diversifications
may not be apparent – at least in the short run – but Anand Mahindra, managing director in an
interview to a business magazine, defended the strategy posture by saying: “We increasingly want
to be in B2C businesses because it’s my belief the biggest legacy you can leave behind is a brand. If
you leave behind a solid umbrella brand, there is nothing better than bequeathing that to future
generations and managers.”

QUESTION
1. Prepare a detailed SWOT analysis of this Group, using the information provided above as well
as some additional research on the Web you would need to do.
2. Identify which of the Grand Strategies the Group has adopted and explain your stand

INSTRUCTIONS
The length should be not more than 1500 words.

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