Mahindra Group Focuses on Scale for Growth

New Delhi, Jun 12 (PTI) Farm equipment to aerostructure conglomerate Mahindra Group will focus on delivering scale with its businesses that it 'believes' will cover 70 per cent of India's growth over the next decade, according to its Managing Director and CEO Anish Shah.

The group, which has completed exits from 15 companies in a variety of areas to become a much leaner and agile organisation, is also focusing on increasing the valuation of its newer businesses, what it calls 'growth gems' by five times in the next five years from the value of USD 4.2 billion as on March 2024.

"Today, what we have is a set of companies that we feel are very strong, very well positioned in the market and each of them can be a scale company.

“For us now it is about delivering scale," Shah told PTI in an interview.

When asked where he sees the Mahindra Group in terms of size and scale in the future, he said, "Our focus now is to deliver scale, focus on the businesses we have. These businesses cover what we believe is 70 per cent of India's growth over the next decade. Therefore, we are very well positioned to grow with India and that's our goal for 2030."

Elaborating the group's ambition, he said in the automobile and farm equipment vertical the approach is to capitalise on market leadership while it would strive to 'unlock the full potential' of Tech Mahindra (TechM) and Mahindra Finance "companies which have underperformed the industry in the past few years but are very strong franchises and can come back very well".

"Mahindra Finance is already showing great progress in its turnaround and has a year to go before it completes its turnaround. TechM has started its turnaround," Shah said.

The 'growth gems' comprising 10 businesses, which include three listed entities -- Lifespace, Logistics and Holidays -- and seven unlisted entities, including last mile mobility, farm machinery, aerostructures, Classic Legends, Susten (solar business), and Accelo (vehicle recycling business), are also set to grow further.

"Our growth gems have already grown 5x in valuation in the last four years.

"Their collective valuation was USD 0.8 billion in March 2020. It is USD 4.2 billion in March 2024. So, we have already grown 5x in the last four years and we want to grow 5x more because that will bring scale for these businesses," Shah said.

When asked about the possibility of IPO among the unlisted entities under the 'growth gems' umbrella, he said, "Accelo as a company is focused on decarbonising the auto industry. That will be on a path to listing. We have not looked at a timeline as yet, (what is) more important is to ensure that we build scale in the business, and prepare it to stand independently on a much larger business and then we will look at listing after that."

Shah also said the Mahindra group is scouting to enter a new business area but has not yet identified what it would be.

"We don't have a real answer on the new area right now. What we have signalled to our investors is that we will get into one new area," he said, adding that it will enter the new business only if it is able to add significant value in that space and meet the group's 'high bar' and principles.

"It has to generate returns which are greater than what the rest of the industry can generate. It has to be something at scale. Only then we will get into it, if we don't find something that meets this criteria then we won't because we are already putting significant investments into our current set of businesses and they are very well positioned," Shah said.