The Sensex has doubled in the past seven
years, but the value of the M&M scrip has
risen 20-fold, if you factor in a 1: 1 bonus
issue in June 2005. In July 2007, the
Bombay Stock Exchange brought M&M
back into the Sensex. How did you manage that turnaround?
In 2001, I did some research and identified four
characteristics that successful companies share.
One, they aspire to be leaders in their businesses.
Two, they have global potential. Three, they are
innovative. Four, they display a ruthless focus on
financial returns. We held a conference for senior
executives in 2002, which has since become an
annual event, and I announced that all the companies in the group would have to conform to
those four principles – particularly the financial
goals we had set. If a company didn’t meet the
financial targets we had drawn up for the next 1 2
months, it would have to fold. In just a year’s
time, there was a near-total turnaround, with
almost every company’s profits and cash
flow shooting up. That marked a turning
point, and we haven’t looked back.
At the 2003 Blue Chip conference, as we
now call our annual retreat, I asked every
company to go from good to great by innovating to insulate itself from volatility and
by striving for higher goals. We made record
profits that year, and in 2004 we decided that
every company in the group should become the
most customer-centric in its industry. In 2005, we
said we would double revenues and triple profits
by 2008, which we have managed to do. We tried
to intensify our focus on the customer in 2006,
and in 2007, I again made the case that innovation should become M&M’s top priority.
Your focus on innovation is unusual in India,
where companies concentrate on generating cost-related advantages. Why do you
believe innovation is important for an
emerging giant like M&M?
Innovation has been one of M&M’s priorities
for some years, but I brought it back to center
stage last December. The more I learn about industry structures, the more I feel that once a company has paid the fee, in a manner of speaking,
to enter a sector, it becomes even harder to stay
afloat. In 1996, when American companies were
implementing quality-related practices in order
to compete with Japanese rivals, [Harvard Business School professor] Michael Porter unveiled
Infrastructure
Development
special economic
zones; time-share
resorts; water supply
Mahindra Lifespace
Developers*
Farm Equipment
tractors; seeds;
pesticides
M&M*
Punjab Tractors*
Systech
automotive technologies
and components
Mahindra Ugine Steel
Company (MUSCO)*
Automotive
utility vehicles;
commercial vehicles;
small cars (in partnership with Renault)
M&M*
Information
Technology
telecommunications
software;
SCM software
Tech Mahindra*
After-market
used cars; spares
Mahindra First Choice*
Trade, Retail,
and Logistics
agricultural produce
exports; logistics; steel
imports
Mahindra Intertrade*
Financial Services
rural consumer finance;
rural insurance
Mahindra Finance*
Note: The group’s other businesses, such as film production and defense systems,
are part of a Specialty Businesses group.
