Anand Mahindra’s story is deeply entwined with that of modern India, which has transformed itself in the past 25 years from an impoverished nation into the world’s third-largest economy, by purchasing-power parity.
The charismatic chairman of the privately held Mahindra Group, Mahindra, 61, has stayed a step ahead of his country’s evolution, embracing globalization, entrepreneurship, and socially responsible policies to revive the once-sleepy industrial firm his grandfather co-founded in 1945. Today, Mumbai-based Mahindra Group is a sprawling federation of 154 subsidiaries, with interests ranging from aerospace and finance to resorts and technology. It operates in more than 100 countries and generates about $18 billion in annual sales. Mahindra & Mahindra (ticker: MM.India), the group’s flagship company, is the world’s largest tractor maker by volume and one of India’s largest auto makers. It generates more than a third of the overall group’s revenue.
After India won its independence from Britain in 1947, the government created a planned economy, allowing only designated companies to make certain goods. Mahindra & Mahindra, then primarily a jeep- and tractor-assembly company, was a beneficiary of that policy and enjoyed a cozy existence for decades. But that left it ill-equipped to handle the competition that arrived following India’s economic liberalization in the early 1990s.
Mahindra, who studied film at Harvard University and earned an M.B.A. at Harvard Business School, understood the challenge better than most. After returning to India in 1981, he joined the family’s specialty steel business and, a decade later, became deputy managing director of Mahindra & Mahindra. Intellectually curious and well versed in management and corporate success stories, he helped M&M fend off larger, more technically savvy rivals.
To boost the company’s competitiveness, Mahindra focused on improving efficiency. He took aim at workers’ sacrosanct annual bonuses, tied to India’s Diwali holiday, and linked the payments more closely to productivity. That earned him death threats, but it revolutionized Mahindra’s culture, paving the way for the company to grow into a global player whose cars are now sold in Europe, Africa, and Latin America, and whose tractors are increasingly popular on U.S. farms.
“Great leaders have to be able to look through a microscope to deal with today’s issues, and through a telescope to position for the future, and he has been able to do both well,” says Vijay Govindarajan, a professor of international business at the Tuck School at Dartmouth College.
Mahindra was named vice chairman of Mahindra & Mahindra in 2003 and chairman of Mahindra Group in 2012, succeeding his uncle, Keshub Mahindra, then 88. (Like many Indian companies, Mahindra Group doesn’t use the chief executive officer title.) Under the younger Mahindra’s leadership, the parent company expanded across industries and geographies, and built upon its reputation, especially in the developing world, as a quality brand. “The Mahindra brand spelled trust, and could lend itself to new businesses in emerging economies, where there were many fly-by-night operators,” Mahindra says.
Recognizing investors’ disdain for conglomerates, Mahindra organized the family’s growing empire as a loose federation of companies that operate independently, each with its own balance sheet and cash flow, a model similar in structure to Warren Buffett’s Berkshire Hathaway (BRK.A). Mahindra hired veteran executives, often from large companies in other industries, hoping they would bring a fresh perspective to the business, and gave them autonomy. More than 80 acquisitions in the past decade have helped to underpin the group’s growth.
Mahindra likens Mahindra Group to a banyan tree, crediting his assistant with the metaphor. “The original trunk is the original business,” he says. “It nurtures stuff. Aerial roots come to the ground and find their own nutrients. Eventually, when you look at an ancient banyan tree, the challenge is to see which is the original trunk and which are the aerial roots. Some rot, some don’t.”