Business Times, Singapore
Published January 2, 2010
India Inc's Renaissance man
Anand Mahindra talks about his group's takeover of Satyam Computer and its plans to
become a global automaker. By Vikram Khanna
'IT makes life interesting,' says Anand Mahindra when asked about how he manages a corporate
group that sprawls across at least eight different industries. The US$6.5 billion Mahindra group,
which was started by Anand's grandfather, is a household name in India, including among the
rural masses. In the 1950s and 1960s, Mahindra was best known for its jeeps. Today, its rugged
sports utility vehicles (SUVs) ply India's roads and its tractors plough farmlands across the nation.
The group, which is among India's top 10 industrial houses and employs more than 100,000
people, is also in steel, financial services, infrastructure, hospitality, real estate, machine tools
and information technology.
Although it has been in existence since 1945, much of
the group's expansion has happened on Anand
Mahindra's watch. Armed with degrees in first, film
from Harvard College and then a Harvard MBA, he
started his career with the Mahindra Ugine Steel
company. He took over as deputy chairman in 2003.
He is a Renaissance man among Indian industrialists
- academically brilliant, widely read, an accomplished
writer, with an abiding interest in world affairs,
photography, football and of course, movies - which
he even knows how to make. And yet, he's down-to-
earth enough to mingle with workers on the factory
Until this year, the Mahindra group had no significant business interests in Singapore. But last
year that changed. In January 2009, the founder and CEO of Satyam Computer Services, one of
India's largest and best regarded IT services company, resigned amid a dramatic financial
scandal. The company's share price collapsed and a rash of lawsuits ensued. Subsequently,
several companies joined a bidding war to take over the beleaguered Satyam. The winner - which
came as a surprise to many in the industry - was Tech Mahindra, a joint venture between the
Mahindra group and British Telecoms, which paid US$354 million for a controlling interest. In
June 2009, Satyam was re-branded Mahindra Satyam. The top management changed, but most
of the staff remained, as did nearly all clients - including those in Singapore, where Satyam has
had a presence since 2000.
A marriage made in heaven
Mr Mahindra describes the Satyam takeover as 'a marriage made in heaven'. 'Even though there
was scepticism at first - we were seen as lightweights, which frankly worked to our advantage in
the bidding - after that, everybody took the view that the Lego-type fit is clearly a winner,' he says.
'Just when people think there's going to be no growth in
America, the way we see it, that's the time to go in. What
better time can you get than when the entire auto
industry in the US has been shaken up and rattled, when
the historical loyalty to the big three carmakers is at its
lowest ebb?' 'We had grown to be the number one
player in India in telecom industry
solutions. We had grown to a billion dollars in turnover. In Europe we have a substantial operation
because of our joint venture partner, British Telecom. And in the US, AT&T is our second largest
client after BT.'
'So when you reach that kind of level, the question any board asks is: what is the next growth
frontier. And that was a question that we had asked in several strategic reviews in Tech Mahindra
over the years: should we become a much larger service company, or should we remain
'The answer, until last year, had been let's remain focused and dominate our niche, which is
telecoms. That served us well, because the telecom industry grew rapidly. But in the last review,
the board had actually made a decision, well before the problems at Satyam, that the time had
come to look at diversifying.
'When you're at US$1 billion, it's harder to grow organically,' says Mr Mahindra. And so Tech
Mahindra had been looking around for acquisitions in any case. 'I won't name names, but anyone
who knows the Indian IT industry knows who are the wallflowers waiting to be taken for a dance,'
he says. 'Then, all of a sudden, serendipitously, Satyam came along and we were fortunate that
our team was quick to grab the opportunity.
'So now we have a substantial US business. If you look at the fit, it's an extremely complementary
There is very little overlap, he explains. 'Satyam's weakest spot, in terms of size of revenue, not
competence, happened to be telecoms. So that was one complementarity. Another was that we
were stronger in Europe, Satyam was stronger in the US, which also hedges our portfolios in
terms of currencies. That's why I say this is a marriage made in heaven.'
However, the Satyam acquisition came with some unwelcome baggage - in particular, lawsuits
filed by aggrieved investors, many of them in the United States.
Mr Mahindra says his team were well prepared for this. 'When you go in to make a bid, you don't
go with blinkers on. All this was an open book to the bidders. What would you do in my situation?
You would go in and assess every single legacy issue and you would assess what cost you
would incur in terms of resources and time. And you would factor that into what you bid. So that's
what we did. And we have not found anything that we had not planned for.'
Meanwhile, the integration of Tech Mahindra and Satyam is on track, he says. 'From a
reputational point of view it's ahead of track. And that has not to do with us. One of the things we
encountered when we met Satyam's clients - even before we bid - was that, yes, while the
founder of the company had had some misadventure, every client, without exception, told us that
the Satyam people were among the best they had encountered. They were the most customer-
centric, most flexible in providing the services they wanted. And most importantly what the clients
found was that, during Satyam's crisis, they actually experienced enhanced service levels. That
shows the DNA of a company; it shows that this was a staff that cared for the company. All hands
were on deck; this was not a ship that people were deserting.'
'We've inherited that. I take no credit. Yes, I would like to think that the Mahindra name brings a
reputation for integrity and ethics, which makes up for what was suddenly a glaring lacuna at
Satyam. But in terms of the operations, the competencies, the people, Satyam has been a
substantial addition to the Mahindra group's reputation.'
But Satyam is only one slice of the Mahindra empire. 'If you look carefully, a lot of the businesses
are adjacencies,' says Mr Mahindra. 'We have the automotive and the tractors, which are both
linked - the business model is very similar. Then you have the finance, which grew up funding
these two, but then has become the largest private sector finance company in rural India.
Mahindra Finance has over 600 branches. It is basically financing vehicles and tractors, with
microfinance being a new area. It is the third largest financier of Maruti cars in India. We've also
financing rural housing and are one of the largest insurance brokers in the country.
'So what we have built is a fat pipe to rural India, which is the promise of India and to which we
can now provide a whole slew of financial services.'
The group also makes two-wheelers, and auto components, which again are related to
automobiles. So five out of its eight sectors are in adjacent businesses. IT, and infrastructure -
including hospitality - are the new segments that Mr Mahindra set up from scratch.
Expanding the knitting
Given the extent of the group's diversity, what is its core competence?
'Core competence is a question mark in an economy which is liberalising,' says Mr Mahindra.
Referring to the 1980s when he started out in the business and Indian industry was hemmed in
by red tape, he says: 'How could you have a competence in a regulated economy? I remember
the management guru CK Prahalad used to hold seminars where he would try to tell us about the
importance of focus and core competence and 'sticking to our knitting'. We would say 'what
knitting? We were never allowed to do any knitting! So let's do some knitting first and then we'll
stick to it after that.' So in a sense what happened is that we expanded the Mahindra group's
But unlike GE in the United States which has all its companies under one roof, the Mahindra
group isn't a conglomerate, according to Mr Mahindra. 'We are a federation as I like to call it,' he
says. 'Each of the group's companies is independently listed. What they have in common is our
core values and our core purpose, plus synergies, which gives them more traction than other
'And our federation, when you look at it, is in fact a microcosm of the Indian economy,' he adds.
'We are leveraging the India story. If the India story fails, Mahindra will fail. And if the India story
works, we'll surf along with it.'
But now, the Mahindra group is embarking on a major expansion in a market that is not for the
faint of heart. It is gearing up to sell its SUVs in the United States.
Mr Mahindra acknowledges that it's a brave thing to attempt, especially at this time of recession,
in which the auto industry is among the worst hit.
'But we're not being contrarian for the sake of being contrarian,' he maintains. 'If you look back at
the history of the company, there are many anecdotes about how we've responded.
'For example, in 1973 when the first oil crisis hit, before I joined the company, sales of gasoline
vehicles tanked. Within six months, Mahindras reached across the wall, we picked up the diesel
engine from our tractors and planted it into our jeeps. And we never made a loss, whereas every
other car company plunged after '73. That story, I think, really encapsulates our DNA. We react
very quickly, we respond very well to crises and see opportunities when they may not seem
But the US is a super-competitive market for cars. What would Mahindra's USP be? Indeed, why
go there at all when there are easier markets around?
'We want to build a globally renowned brand in our niche area of sport and utility vehicles. We
want to be the first and best-known Indian brand around the world,' says Mr Mahindra. 'And when
you have that mission, you have to be global, and you just have to be in the US. As the Frank
Sinatra number goes, if you can make it there, you can make it anywhere.
'If you are able to meet US standards of safety and regulation, you are frankly at the cutting edge.
Then you can compete anywhere in the world. The diesel vehicle we're about to launch has met
emission standards even in California, which are the toughest. So we're ahead of the curve as far
as emission controls are concerned.'
But why try to break into the US market at this time, when the economy is still reeling?
'That's where the contrarian edge comes in,' says Mr Mahindra. 'Just when people think there's
going to be no growth in America, the way we see it, that's the time to go in. What better time can
you get than when the entire auto industry in the US has been shaken up and rattled, when the
historical loyalty to the big three carmakers is at its lowest ebb? American consumers today are
willing to experiment with challenger brands like they have never done before. The breed of
consumers who were loyal to GM or Chrysler all their lives doesn't exist any more.' He adds that,
as a brand name, Mahindra is not unknown in the US; it has been selling tractors there for 20
years and is the fourth largest player in that market.
Mr Mahindra also sees a specific niche opportunity. 'There is a gaping hole in the US market for a
compact diesel pickup,' he points out. 'There is no competitor among diesel compact pickups in
The rising consciousness about green technologies will also provide an impetus, he believes.
'America was never fond of diesel vehicles because there's a perception that they are clunkers.
But that's an old, mistaken perception. In Europe, almost two thirds of the cars run on diesel,
because it's seen as a green fuel.
'America is beginning to understand that. And happily, some of the large European players like
Volkswagen are busy evangelising about diesel, and we'll just follow in their wake.
'So if you look at the blogs coming out about us, obviously there is some scepticism about an
Indian company entering the US car market, but there are also people saying, wow, if I can get a
compact diesel pickup, that's just what I've been looking for.
'So these are perfect conditions to go in,' says Mr Mahindra. 'Yes we have to take a risk. Will we
succeed? I don't know, it's the world's toughest market. But we'll never know unless we try.'
Vice-chairman and managing director, Mahindra and Mahindra (M&M) India, 54
· 1955 Born Mumbai, India, May 1
· BA (Film) Harvard College, Magna Cum Laude MBA Harvard Business School
· 1981 Joined Mahindra group
· 1997 Managing director M&M
· 2003 Vice-chairman, M&M
· 2003/04 President, Confederation of Indian Industry
· 2006 CNBC Asia Business Leader award
· 2008/2009 Economic Times Business Leader of the Year Director, National Stock Exchange of
India Member, Harvard Business School Advisory Board Co-chairman, International Council of
the Asia Society, New York