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Mahindra & Mahindra is working to scale up some of its smaller businesses to match its portfolio of multiple large companies, the top executive at the tractor-to-technology group told ET in an interview. While scaling and growing the businesses is a top priority, operational excellence will be path to growth and not acquisitions.
It currently operates through three flagship divisions in auto, farm, and services with each contributing almost a third of revenue to the group’s top line. The services business has a mix of financial services, technology, logistics, hospitality and real estate interests.
“If we were to look at the group five years later or 10 years later, there should be a greater number of large businesses that we have,” Anish Shah, group CEO and MD, Mahindra & Mahindra, told ET.
The businesses for the scale-up include growth gems the company has identified among the 10 businesses to focus over the next decade. These include listed and unlisted entities in hospitality, realty, aerospace, renewables, and last-mile mobility.
“We aren’t worried as much about short-term profitability of these businesses but whether it’s taking the right decisions,” he said.
According to Shah, there’s a lot more potential in the group’s services businesses, which includes Mahindra Financial Services, Tech Mahindra and others like hospitality and aerospace business.
In response to whether the group will take an inorganic route to growth, he said, “First, we are looking to create operational excellence in all the businesses. We have it to a certain extent while others have yet to get there. We are not looking at acquisitions but operating excellence as a means of growth.”
Mahindra & Mahindra is the Company of the Year at The Economic Times Award for Corporate Excellence. In a close vote, the jury preferred it over other nominees for its remarkable performance in the manufacturing sector and a stellar FY24, a landmark year for the company in many ways. It reported the highest ever annual net profit of Rs 11,269 crore during the year, reflecting a three-year CAGR (compound annual growth rate) of 83.9% while revenue grew by 23.3% annually to Rs 1.4 lakh crore. The company’s RoE (return on equity) expanded by 630 basis points on-year to 22.4% in FY24. The return on capital employed expanded by 870 basis points to 26.8% from the year ago.
The group’s automotive and farm businesses have been on a roll even in the current financial year and have been instrumental in driving the consolidated earnings.
Mahindra’s consolidated revenues for the first nine months of FY25 rose 12.5% to Rs 1,16,612 crore from Rs 1,03,627 crore in the year-ago period, while net profit went up 13.14% to Rs 9,634 crore from Rs 8,515 crore. Its earnings per share in the first nine months have increased to Rs 86 from Rs 76.1 in FY24 in the same period.
Shah attributed Mahindra’s performance to talent, operational excellence and focus on technology. “The first credit goes to our talent and the DNA of the Mahindra Group. We will really give a lot of credit to the leaders of our past who built a very strong group with a strong entrepreneurial culture. That’s a big benefit that continues to help us grow.” The second is operating excellence and the company’s focus in ensuring that even as the businesses are growing, each is operating to its full potential, he said.
“We have been bold, agile, and collaborative, in what we do. These are the behaviours that we have outlined for our leaders on the foundation of our values,” he said. A sharp focus on technology too has helped. This is an area the group has invested a lot both in terms of capital and in terms of the time we spent, he noted.
While M&M’s farm and auto businesses have attained scale, the company has no immediate plans of demerging them and listing them separately. “The focus remains on strong operating performance, as the company generates sufficient cash internally,” Shah explained.
Meanwhile, Mahindra continues to explore new opportunities but has set a high bar. Any new venture must be scalable and deliver superior returns. So far, no opportunity has met these criteria, he said.
Scaling up hospitality
Meanwhile, Mahindra is actively exploring ways to scale up its hospitality business-Mahindra Holidays & Resorts, one of the businesses that has the potential to become large. It seeks to capitalise on “strong customer satisfaction and high occupancy rates” of 84-85% across its 100 resorts, said Shah.
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Mahindra & Mahindra is focusing on scaling its smaller businesses, prioritising operational excellence over acquisitions.
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Mahindra & Mahindra is working to scale up some of its smaller businesses to match its portfolio of multiple large companies, the top executive at the tractor-to-technology group told ET in an interview. While scaling and growing the businesses is a top priority, operational excellence will be path to growth and not acquisitions.It currently operates through three flagship divisions in auto, farm, and services with each contributing almost a third of revenue to the group’s top line. The services business has a mix of financial services, technology, logistics, hospitality and real estate interests.”If we were to look at the group five years later or 10 years later, there should be a greater number of large businesses that we have,” Anish Shah, group CEO and MD, Mahindra & Mahindra, told ET. The businesses for the scale-up include growth gems the company has identified among the 10 businesses to focus over the next decade. These include listed and unlisted entities in hospitality, realty, aerospace, renewables, and last-mile mobility.
“We aren’t worried as much about short-term profitability of these businesses but whether it’s taking the right decisions,” he said.
According to Shah, there’s a lot more potential in the group’s services businesses, which includes Mahindra Financial Services, Tech Mahindra and others like hospitality and aerospace business.In response to whether the group will take an inorganic route to growth, he said, “First, we are looking to create operational excellence in all the businesses. We have it to a certain extent while others have yet to get there. We are not looking at acquisitions but operating excellence as a means of growth.”Mahindra & Mahindra is the Company of the Year at The Economic Times Award for Corporate Excellence. In a close vote, the jury preferred it over other nominees for its remarkable performance in the manufacturing sector and a stellar FY24, a landmark year for the company in many ways. It reported the highest ever annual net profit of Rs 11,269 crore during the year, reflecting a three-year CAGR (compound annual growth rate) of 83.9% while revenue grew by 23.3% annually to Rs 1.4 lakh crore. The company’s RoE (return on equity) expanded by 630 basis points on-year to 22.4% in FY24. The return on capital employed expanded by 870 basis points to 26.8% from the year ago.The group’s automotive and farm businesses have been on a roll even in the current financial year and have been instrumental in driving the consolidated earnings.
Mahindra’s consolidated revenues for the first nine months of FY25 rose 12.5% to Rs 1,16,612 crore from Rs 1,03,627 crore in the year-ago period, while net profit went up 13.14% to Rs 9,634 crore from Rs 8,515 crore. Its earnings per share in the first nine months have increased to Rs 86 from Rs 76.1 in FY24 in the same period.
Shah attributed Mahindra’s performance to talent, operational excellence and focus on technology. “The first credit goes to our talent and the DNA of the Mahindra Group. We will really give a lot of credit to the leaders of our past who built a very strong group with a strong entrepreneurial culture. That’s a big benefit that continues to help us grow.” The second is operating excellence and the company’s focus in ensuring that even as the businesses are growing, each is operating to its full potential, he said.
“We have been bold, agile, and collaborative, in what we do. These are the behaviours that we have outlined for our leaders on the foundation of our values,” he said. A sharp focus on technology too has helped. This is an area the group has invested a lot both in terms of capital and in terms of the time we spent, he noted.
While M&M’s farm and auto businesses have attained scale, the company has no immediate plans of demerging them and listing them separately. “The focus remains on strong operating performance, as the company generates sufficient cash internally,” Shah explained.
Meanwhile, Mahindra continues to explore new opportunities but has set a high bar. Any new venture must be scalable and deliver superior returns. So far, no opportunity has met these criteria, he said.
Scaling up hospitality
Meanwhile, Mahindra is actively exploring ways to scale up its hospitality business-Mahindra Holidays & Resorts, one of the businesses that has the potential to become large. It seeks to capitalise on “strong customer satisfaction and high occupancy rates” of 84-85% across its 100 resorts, said Shah.