'Our M & As not done for ego or size'
Q: One way to look at Mahindra & Mahindra as a group over past many years, after you have taken over, you have taken risks and gone into new businesses, but you have also avoided areas that are hyper competitive. You have gone into niche areas, where you think you had capability, and you have built that from scratch, the SUV business for instance where you are at the top of the heap. What made you go and buy a company like Satyam, with all the history, the problems, controversies?
A: First of all, let me state outright that it's not an individual decision. Therefore, when you look at M&M, there are number of companies, it's not just one. So the question is what is the strategic need, strategic urgency for inorganic growth of a particular business - that will determine your risk profile. I know sometimes it becomes easier to look at the group in one single personality profile. If you are one monolithic company that may be easier, but we are a federation of companies. So I would say the test would be different for each business.
If you look at the automotive sector, we have inherently shied away from inorganic moves because it's a niche play so it doesn't need that. On the other hand, the tractor business, we are already the world's largest brand, largest single company by volume. So there you have an approach to be in markets where you play the volume game, that's why China. the two acquisitions in China, and I think we are now the fourth largest player there.
If you look at Systech, there was no company, no personality to take, it had to start from scratch and start inorganically. So for TechMahindra, the challenge in front of the board was what's next growth opportunity. We had taken a decision to focus on telecom sector for a while, then the board said if we want to continue for growth, time had come to look for inorganic opportunities. Then you see what are the inorganic opportunities, and then at a final stage, if there is a Mahindra group DNA, you take a very calibrated risk. On the face of it, it looked very daunting, but when we actually went in, and I had talked to Ramalinga Raju before this and had explored the opportunity of an alliance with Tech Mahindra before this. I renewed that offer to him when Maytas happened without knowing what the next chapter was going to be, and then when this happened, we are in the queue with other bidders. So we had already identified Satyam as an attractive inorganic opportunity, and therefore the next step was for us to say what seems daunting, how daunting it is. And that's where the process followed by the government played a key role in mitigating risk. If they had moved slower, the company would have been deteriorated, clients would have left, then you would have asked what to buy. If there is any common DNA for us, it's that we take calibrated risk. We are not about arrogance, none of our M & As would done out of ego or for the sake of size.
(Source: Interview with Anand Mahindra - Economic Times dtd 29-Jun-2010)
A fine distinction between organic growth and inorganic growth has been made by Anand Mahindra in the above answer. The vision envisaged by Anand Mahindra also explains the comeback of Satyam in a very short span of time. In the same interview he has mentioned that 'I think every calculation we made has worked out the way we had envisaged. So the journey from that point of view has been useful. If you ask me to give a score to the team, I would say they built trust faster than I thought, rebuilding trust if you will. That's not something I can take credit for, it's again the reason we bid for this company. When we went out to customers of Satyam before we bid, they told us it's a real company, you get real service'.
No comments:
Post a Comment