Spark the Rise Round 5: What is your definition of a hero?News & Updates | February 7, 2012
Dear Spark the Rise Folks, Round 5 has been truly...
The following speech was made by Anand Mahindra at the 68th Annual General Meeting of Mahindra & Mahindra Ltd. on Aug. 7th, 2014
I want to use the limited time allotted for the Chairman’s address to talk about the Mahindra Group – not just M&M Ltd., but the entire Group – and how, because of its unique approach and structure, this Group can contribute to strengthening the national economy at this very exciting time in the history of India.
In speaking of the Group, I will invariably also find myself speaking of the state of our nation because it is uncanny how the Mahindra Group’s destiny and India’s destiny have always been intertwined. In the Mahindra Group, we like to say that India and the Mahindra Group share the same horoscope. We were born on a significant date – October 2nd, Gandhiji’s birthday; we started business in the first flush of Indian independence; we have become prosperous by playing a role in India’s progress, by choosing businesses that are in alignment with India’s needs.
When we first went into business in 1946 there were no tarred roads connecting the villages of India. So we went into the business of off-road transport. In the Sixties, with the advent of the Green Revolution, we went into the business of tractors to boost India’s agricultural growth. But when India lost her way in the licence raj, we did too – and like India, we lost the skills that were needed to give us an edge in the modern world – competitiveness, innovation and an outward looking mindset.
However, in the liberalised Nineties, as India clawed her way back onto the world stage, so did we. The Group expanded into the sunrise industries that enabled India to shine – Information Technology, Real Estate, Holidays, Rural Finance. And in the confident first decade of the new millennium, as India prospered, and as her consumer base grew, the Group expanded into new fields – into Retail, into Agri business, into a diverse array of mobility from Two Wheelers to Aerospace, into new models of private equity and education.
When India wins, the Group wins by doing the things India needs. So, can India win today and what can the Mahindra Group do, to facilitate this victory?
When I spoke to you at the AGM last year, the general mood was gloomy. The country was facing a grave economic crisis. We were still bullish on India, but there was a strong feeling that the tide that had carried us forward in the last two decades was ebbing.
Today, as I stand here, the mood couldn’t be more different. It is not that someone has waved a magic wand and wished away all our troubles. Not at all. Most of the things that needed to be fixed last year, still remain to be fixed. And yet, the change is palpable. Where there was a sense of malaise, there is now a sense of movement. Where there was inertia, there is now an undercurrent of energy. Where there was pessimism, now there is expectation. The people of India have spoken loudly and clearly and sent out an unambiguous message of hope – hope that fragmentation will be replaced by unity, that politics will be replaced by statesmanship. There is a renewed sense of purpose in the air.
Even as we speak, an Indian orbiter is winging its way to Mars. It has been launched, with typical Indian ingenuity, at an amazingly frugal cost. The Hollywood movie called Gravity, which was set in outer space cost 100 mn dollars to make. Our rocket, Mangalyaan, has actually reached outer space, at a much lower cost of 72 mn dollars. This is an audacious and aspirational initiative. Of forty previous attempts to reach Mars, only half have succeeded. If we succeed, we will be only the fourth country, after USA, Russia and the European Space Agency to do so.
Why am I talking about the Mars Mission at an AGM? Because I think it is symbolic of where we are today. Because I believe this could well be our chance to regain our lost momentum. Because I believe that this COULD become India’s equivalent of America’s “Man on the Moon” moment.
Of course, Mangalyaan is not in the Mars orbit yet, and neither is the country. At the moment, Mangalyaan is about 100 million km away from earth orbiting the sun. It will take a series of delicate trajectory manoeuvres and utmost precision of timing for it to break into the Mars orbit. If that happens, we will be pioneers on Mars. If we lose the chance, we will be eternal also-rans. India too is at an audacious moment in its history, but it is not there yet.
I am an incurable optimist – I believe we will succeed. And I also believe that success will be a joint enterprise, not the Government’s task alone. As they say, you cannot whistle a symphony. A great piece of music calls for the coordinated talents of many players. I hope the Mahindra Group can be one of them.
And that brings me to the Mahindra Group. I am often asked what is the rationale for having a Group of companies that appear to be so diverse. It’s not even a conglomerate that combines these businesses in one entity. It’s a flexible federation of companies, each of which is autonomously empowered to reach its goals. Is this really a Group at all? What can be the connection between businesses as different for example as auto manufacturing, real estate, solar power and micro irrigation? How do hospitality and tractors make good bedfellows?
Let me ask you to think of the Group as a weaver’s loom. There are many strong threads vertically. There are many strong threads horizontally. But the real value of the loom emerges only when a selected group of individual threads are woven together in a pattern to produce a coherent and pleasing fabric. Being a Group enables us to do this. It enables a bunch of seemingly unconnected businesses to come together in an unexpected way. Let me elaborate.
Each individual business of course has its strategies, goals and profit targets. But at the highest levels of strategy, we look at more than individual company balance sheets. We look at areas of broader business opportunity. We categorise our businesses into six such opportunities, and perhaps I can be bold enough to say that all of these fit into the priorities that the Government has set for India – perhaps more evidence of the interlocking of our destinies? These six are:
Of course, these are not new businesses. The Mahindra Group has been engaged in each of these areas for a long time now. We have been pioneers in looking at businesses in groups or clusters ever since 1994, when we first reorganised the Mahindra Group into six clear business sectors, each of which generated profitable internal synergies. As business gets more and more complex, we derive greater and greater value from the internal and cross sectoral advantages that this cluster approach brings us.
So we have been utilising a sectoral structure and pursuing cross-sectoral synergies for a long time now. But what is different today is that for each of these areas, we have redefined the challenge.
In the case of Rural Prosperity, the earlier question was: how can we sell more tractors? We now ask ourselves a different question – we ask: how can we enable rural residents to both create and experience, more value in their lives? What businesses will help them RISE and allow us to share in that value-creation?
That changes the entire paradigm. Now it’s not just a matter of selling tractors. To answer this new question, M&M will continue to sell tractors – but additionally our Agribusiness group will provide a range of extension services helping farmers improve their technology, and provide seeds and know-how to upgrade inputs. Mahindra Shubhlabh will work with farmers to grow more value-added crops and fruits and brand and market their output to deliver higher returns. Mahindra Solar can provide distributed power where there wasn’t any. Mahindra Financial Services will lend them money not just to buy tractors but also to build houses via its rapidly growing subsidiary, Mahindra Rural Housing Finance. And another subsidiary, Mahindra Insurance Brokers, will insure their lives and their health. These seemingly disparate companies working together can bring about rural transformation. That is the power of the Group.
The second area of opportunity is sustainable urbanisation. By 2030, 590 million Indians will live in cities. 70% of net new employment will be generated in cities. How are these millions of people going to live, with our existing cities already bursting at the seams? The obvious answer is new cities, a hundred smart cities, as our Prime Minister has declared. But the question cannot be how do we build and sell more houses. The question has to be how we give every Indian, no matter what the economic status, a reasonable quality of life. How do we redefine the concept of sustainable urbanization? We have started on the journey of finding answers to those questions.
The Group’s Lifespaces business builds ecologically sustainable housing across the economic spectrum. But most important, it plans to deliver affordable housing with the motto of ‘Lower cost but not lower quality.’ It builds not only houses but cities. It already has the experience of building two integrated cities from the ground up – places where home, work and play are integrated along with sports, arts and other activities that are food for the soul. These are the signposts to the cities of tomorrow.
So imagine, if you will, a city planned from the ground up by Mahindra Lifespaces. It will offer ecologically certified residences across the economic spectrum. It will boast of wide roads and open spaces where apart from trees and flowers, vegetables are grown in vertical gardens by Mahindra Shubhlabh. The city will be surrounded by fields where organic farming with micro irrigation is done under the guidance of the Agribusiness division. The city will have a University where the engineering college is run by Mahindra École Centrale. Those who don’t wish to go for higher education will be groomed in vocational skills by Mahindra Namaste.
It will be a smart city, with a digital spine provided by Tech Mahindra. Within the city, transport will be by electric vehicles from Mahindra Reva. Transport between cities will be through hybrid vehicles. Of course, this is only a scenario, but it gives you an idea of how much the Mahindra Group’s seemingly unrelated businesses could contribute to sustainable urbanisation.
Moving to the Future of Mobility. The challenge statement is no longer going to be: which vehicle will the consumer buy? Consumers are seeking a balance between cost, convenience, performance, quality, safety and fuel efficiency. Therefore, the defining paradigm here would be: how will consumers decide to move from point A to point B efficiently and sustainably? So the Group now produces everything from two-wheelers to planes. We have hybrid cars, electrically operated cars like the E2O, electric scooters made by GenZe in the US which we hope to bring to India soon. We see waterways emerging as an opportunity for moving people and Mahindra boats are well positioned to participate in this opportunity. We build commercial vehicles; we help to design commercial aircraft; and for connectivity with rural areas where regular planes can’t land, our Australian subsidiary, Gippsland makes AIRVANS which are essentially airborne utility vehicles. Hence we are not merely looking at vehicles. We are looking at the future of mobility.
Our fourth area focuses on Tourism and Leisure. The question here is not how we sell more timeshares. The question is how do we enable Indians to connect and unify? Even more than a business opportunity, we believe that tourism is a way of unifying India, of connecting Indians with each other and with the world. Our Prime Minister has talked of Tourism as one of the 5 Ts. The burgeoning middle class of India is confident, enthusiastic about exploring other parts of India, eager to travel. They expect educational value from leisure and world class facilities. Mahindra Holidays offers a wide variety of options to connect all four corners of the country and beyond. Over the past few years, Mahindra Holidays have increased their footprint globally from South East Asia to the Middle East to Europe, offering choice destinations to holiday seekers from India.
Our fifth area of opportunity is Digital Transformation. Here the challenge has shifted from providing hardware and software, to using IT to provide solutions for national, business and social problems. How do we push the digital envelope? And I use the word ‘envelope’ intentionally. The emergence of internet, mobility, social media and networking has erased conventional boundaries, making us a virtual colony – the digital world has thus enveloped us all. It is becoming clear that there is no quicker route to both globalisation and inclusiveness than the digital one. Governments are also realizing the potential of digital businesses in nation-building and governance. Technology is transforming the business world as well, destroying many old businesses and creating disruptive new ones.
We see this “connectedness revolution” as a huge national as well as business opportunity and are proud of the role that our IT business is playing in bringing about this transformation. For example, Tech Mahindra’s mobile wallet solution has redefined how financial services can be provided in un-banked areas. Their “fightback” app helps address the issue of women’s security. Comviva’s mobile lifestyle solutions are helping convert the mobile phone into a lifestyle companion.
I believe that tomorrow’s businesses will be built around NMACS – Networks, Mobility, Analytics, Cloud and Sensors. Frankly, I am excited about this new phase in Tech Mahindra’s journey as they endeavour to co-create and deliver products and solutions that will harness the best of this connected world for the benefit of their clients and the nation.
Our sixth opportunity is focused on Strengthening our Security. We live in an exciting world of opportunities; but all these opportunities are threatened, when the spectres of warfare and terrorism haunt us. Investing in defence is therefore critical for countries to protect their people and resources. Mahindra Defence has had a long history of providing armoured vehicles to India’s army and police forces. As the gamut of attack weaponry increases, a corresponding growth in technology in defence equipment is required. We have, therefore, expanded our range of products and services to include surveillance equipment like radars and signals, multi-modal patrol vehicles and simulation laboratories.
The recent announcement of 49% FDI in Defence will enable us to access global partners who could complement our strengths and bring in new technologies. However, and I must emphasise this, the Mahindra Group believes only in defence, not in offence. Our question is not: how do we sell more arms? Our question is: how do we enable comprehensive security for citizens?
I believe that with these six areas of opportunity, the Mahindra Group is, as it always has been, in alignment with the nation’s needs. It is not my case that the Mahindra Group should be the supplier of every single product and service the nation needs. It IS my case that the Mahindra Group already possesses a repository of perspectives, processes and skills that may be of relevance to the task of accelerating our economic growth. We understand how to simplify the complex and make independent businesses work synergistically with each other. We understand the world that is to come, as we leverage digitisation to expand our horizons.
We intend to put our shoulder to the wheel and not just benefit from the imminent thrust of economic growth, but also be recognised as an enabler of that growth. This country deserves to reach a higher orbit and we intend to help it get there.
Disclaimer: This does not purport to be a record of the proceedings of the 68th Annual General Meeting of the Company.
On 29 December, 2011, Cyclone Thane ripped into Tamil Nadu in southern India. Forty seven people were killed and the damage to infrastructure is estimated at USD 376 million.
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