Anish Shah says the exercise of exiting loss-making international subsidiaries is almost done
Anish Shah, Managing Director and CEO, Mahindra and Mahindra
Anish Shah, who formally took over as managing director (MD) and chief executive officer (CEO), Mahindra and Mahindra, tells Shally Seth Mohile that the exercise of exiting loss-making international subsidiaries is almost done. He plans to innovate in the farm equipment and auto segments, scale up the “gems” (high potential units) and strengthen new-age businesses. After Anand Mahindra becomes non-executive chairman in November, Shah will be the first professional MD and CEO in the history of the group to be responsible for all the companies under its fold. Edited excerpts:
What tops your priority list in the new role?
We are working towards innovation at our core businesses — auto, farm equipment (specifically machinery) and electric vehicles. We are also scaling up financial services business, which is in the process of creating a separate vertical for digital and leasing businesses. Secondly, beyond our core businesses, we would look at transforming and scaling our gems. These are companies that have a good presence in the market today. Many of them are profitable, cash generating and in a position to raise funds. These include companies like Rural Housing Finance, Bristlecone, agri-business and a few others. I would put Mahindra Holidays, Logistics, and Life Spaces also as growth gems. This is in addition to what we have stated so far. Thirdly, we will be strengthening new-age businesses. This includes Mahindra First Choice Wheels, which recently bought Car & Bike and is well positioned to be a used car platform. First Cry is an example of going down this path. The recent valuation of FirstCry is $2 billion. This is a company in which we had merged our Mom & Me business. It is an example of creating value for shareholders.
Are there some new business segments the group has identified for getting into?
At this point we are being very cautious. We may be looking at one or two areas but the major focus right now would be to scale up our existing businesses. We have a fairly wide presence across multiple industries. Therefore, we will put efforts in scaling them up instead of getting into newer ones.
The capital allocation strategy has shown good progress but exit from Ssangyong is taking longer than anticipated. So, what’s the way forward?
The board took the decision to not put any money on Ssangyong last April and we have remained firm on that decision. There is a buyer who is interested for the last three months. We are holding discussions.
How do you plan to scale up Mahindra Holidays & Resorts (MHRL) and financial services (MFSL)?
The top priority for MFSL is to get back to lower NPA (non performing asset) levels. If you take an instance of buses or commercial vehicles, they have been hit more badly than the smaller businesses — this is the profile of customers who borrow from MFSL. As that improves, we expect better NPAs, going forward. That’s an area of focus and short term in nature. On a long-term basis, we are looking at a digital transformation of MFSL. That’s where we have created a separate vertical that will deal in personal loans, consumer durables, mobilisation of fixed deposits and other areas.
This will help MFSL cater to a different orbit. In addition to that, leasing is a big opportunity for MFSL. We are setting up a separate vertical on this. Mahindra Holidays has a very attractive business proposition. It has really done well through the pandemic due to its business model. Growth is very important for that business. We are looking to add a lot more rooms. We also need to leverage MHRL’s international presence.
Given the supply-side headwinds and increasing competition, how confident are you of a turnaround in the SUV business where Mahindra has ceded significant ground to rivals?
The supply-side issues are short term. The bigger question is what is the success of the models we launch? Some of the models we have launched in the past have not succeeded. Looking at the trend it’s very clear that whenever we have strayed far off from our core segment, we haven’t succeeded. So, we need to focus on our core segment, that is, larger SUVs which combine both off road and on road capabilities. This has paid off. It started with the Bolero, Scorpio, XUV500, and XUV300 and is continuing with the Thar.
How do you plan to deploy the surplus cash? Any plans of increasing dividend payout?
We have committed to our investors that cash from our farm and auto business will remain there and won’t get deployed elsewhere. Secondly, we are looking at more investments in auto and farm—in EVs and farm and machinery in particular. Even after that, we do expect a lot more cash generation that what we have seen in the last two to three years. We will give more cash back to our investors as we generate more cash.