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BW Businessworld

Ambitious Designs

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By the time you read this, the Mahindra group would have unveiled a new brand initiative that better reflects its identity. Over the past couple of decades, the group has grown and diversified spectacularly.

The same is true of the group's flagship Mahindra & Mahindra (M&M). Twenty years ago, it was a profitable and well-run company that focused on tractors and utility vehicles (mostly based on the World War II era Willys Jeep design). It could have chosen to continue down that path and still been a successful firm. But Anand Mahindra, now its vice-chairman and managing director, took a proposal to design and develop a sports utility vehicle (SUV) to his board of directors.
He was asking for a lot of money, and there was a fair amount of scepticism in the market about the project. (Ratan Tata faced a similar reaction when he launched into the Indica and Nano adventures.) There was a feeling that India did not really need to get into the development of an indigenous vehicle; it could easily borrow or licence a new SUV from a manufacturer abroad.

Luckily, the board chose to back Anand Mahindra and the result was the Scorpio, which has been a great success. Since then, the company has gone on to design and develop the Xylo, which has also made a favourable impression in the market.
Now, Anand Mahindra is embarking on his most ambitious foray. He is intent on turning the company into a vehicle manufacturer that straddles the entire spectrum from two wheelers to aircraft. Is this a wise strategy? Is he stretching the company too thin? Will the company's strengths get diffused as it races from one product to another?

Anand Mahindra has his logic for the expansion: in the vehicle manufacturing arena, there is no space for local players any more. You need to be global in scale and ambition. And the old firm was just too small to play in the global market. Even after all the expansion — and the acquisition of the South Korean company Ssangyong — the company still is 13th in the world in the utility vehicle segment. To be a significant player, as he wants it to be, the company needs to grow much bigger. Executive editor Rajeev Dubey discussed the strategy with Anand Mahindra and his core team to put together our cover story this issue.

(This story was published in Businessworld Issue Dated 24-01-2011)