M&M's hidden weapon - Keshub Mahindra

Q: I believe you were amongst the first few members of the Bombay Club as they used to call it.

A: I think that is very misunderstood, there is no such thing as Bombay Club. What happened was that a few of us decided to meet and try to figure out the ramifications of a liberalised economy and we talked about all kinds of things. Sadly there was a leak and interesting part was that the leak was by a waitress at the club. Then it became a bad Bombay Club against liberalisation. We were not against liberalisation. What we said was, yes, liberalise but please follow a decent pace of liberalisation. 

Q: 2001 - 2002 were very bad years for Mahindra & Mahindra. The stock price was low, everyone was wondering how Scorpio would do at that point in time. There were a lot of subsidiary companies in Mahindra. The arrival of Scorpio, do you think that was one of the key turning points of the company?

A: no, I think the turning point was right at the beginning when we were engaged in all kind of businesses. That was really due to government policy. We had a  steel company, ran hotels, we had companies running oil drilling and we had all kinds of investments in different companies.

So we said to ourselves, hold it, this is the time to focus. Then came the crucial question of shall we tie up with somebody to buy technology for the new products, can we really exist in a world of competition with companies like General Motors, which spends USD 6 billion a year in research and development, and Tata Motors with a turnover of was nearly USD 2 million. So how do you compete? So we took a step into the darkness and there came a concept of developing a vehicle ourselves.

The interesting part of the development was that it was a group of 120 young people with an average age of 29, who worked on the Scorpio and it was a great success, it could have bunked. From that we learned a lot. I think it gave the company a new sense of confidence.

Q: In 2001, do you think Anand and you went hands off the business little too soon?

A: I certainly went hands off, not at that time but 20 years earlier. That was a very interesting personal decision because that was 1979, the government decided to restrict the salary payable to  working directors, infact they reduced it. I said this is totally unconstitutional, I resigned as the Executive Chairman of this company and I took the government to court and we won the case. Then that also gave me wonderful opportunity to ensure that there is a development of succession in the company.

Q:  Do you think if you had been more operationally involved and your aggression would have come little earlier, could that have helped?

A: I don't think it was lack of that. In a given environment and economy, things happen. M&M's turnaround, I think is also linked to the turnaround of the country. None of us would have done, how well all of us are doing today if there was no growth rate. If tomorrow our growth rate slips to 5%, we will see what happen to most of these companies. So there is a time and place where these things happen.

Q:  Club Mahindra is in holiday business, it has nothing to do with tractors?

A: This is the fun part of our business. We have been explaining that again and again.

Q: Do you think the group deserves to be pruned further?

A: There is a method to our madness. We have so many subsidiaries; people always criticise us for that. It is really that we wanted to focus in each subsidiary and specialise business and the time would attract people to come and join us. So this is a part and parcel of a vision. It is not something that is accidental and subsidiaries will either fade away, or merge with a big company.

Q: Often because of the number of the subsidiaries,  for many years you didn't quite get the valuations in the stock market you deserve because people found it tough to value all these different businesses?

A: That is one of the reasons why we are going public. Our aim is that as soon as we are totally ready for the market we will go to the market. I think these are the lessons we learned from the 90s and I don't think we would have got the values in that time that we get today.

Q: What is your relationship with Anand Mahindra ?

A: He is my nephew and I have great respect for him. One of the issues that have to be in a relationship is that there has to be a degree of mutual respect. Anand has a fine brain and no person is perfect and I have my weaknesses and he has his. He has got a vision and he has got a strategy.

Q: Did you think he could pull it off in 2001-2002?

A: I think not only him but they pulled it off.

Q: Did you think he helped them pull it off or drive the change?

A: We cannot ignore the efforts put in by Mr Pitambar because he led the restructuring and we were all involved and where Anand drove was his utter belief in Scorpio. It was started by Pitambar but when it was in the half-way stage then it was Anand who believed that this was the right path for growth and that way he gambled his future.

Q: We have heard from people that you have become more of a risk taker than Anand is?

A: I think it is not true because when one is as old as I am then it is easier to take risks for instance if I take risk in a business then I have a simple answers; I don't run the company nor manage it and it is Anand and his people who do that and if they do badly and whole things bombs I fire them and if they do well I take the credit.

Q: Anand studied to be a filmmaker - then how did this handing over happen?

A: There was no handing over. He finished his Harvard undergraduate wanting to make films and in fact he did make a film; then he wanted to work for couple of years and then go back to do MBA and his first choice was Canada. He worked for six months got bored and came back and worked as a trainee in M&M. Later he went back, did his MBA and when he came back, for ten years he was running our steel company .

He was not involved with M&M and was not on the board and he only came into the M&M stream when Pitambar took over and from there he came in and was appointed the deputy managing director, worked under Pitambar. Later the board elected him the Managing Director. So there was no handing over he worked hard like everyone else.

Q: Were your three daughters at any point interested in working for business?

A: No none of my daughters were interested in business.They were all asked but my elder one did not even go abroad for studies and my second daughter went to University of Pennsylvania and was interested in media communications and not business. My third daughter did graphic designs in New York.

Q: You had an incredible relationship with many business leaders. JRD Tata, you drew a lot of inspiration from him the way he structured the Tata Group and ran it?

A: More than the Tata Group, I think he was a true nationalist. He was a man who was born in Paris and spent his childhood in France. He was involved in India's development, he did not quite agree with Pandit Nehru's so-called socialistic pattern of development. They were great friends but they fell out when the government of India started its first steel plant.

He was a humanist and he believed in people. His style of running the company was little different than Ratan. He picked people and left everything to them. My association with him really started with golf course. Even then he was a perfectionist, he would hit a ball 100 yards and I would hit the ball 250 yards then he would come and tell me exactly where I am wrong. I used to tell him why don't you stick to your business.

Q: There are similarities between the Tata Group and Mahindra for many years - both were considered to be slow and not aggressive enough, too many group companies with the Tatas, which they cleaned up and with Mahindra too many subsidiaries though they were valued.

A: There was no intentions to emulate anybody, I think some things come naturally and we firmly believed that was a way to do business and it happened to be the same concept as of the Tatas; so these things come. I think we learned from each other and it is difficult to pin point at what stage you stop and where you take off.

Q: What do you think of Ratan Tata's perseverance of the one lakh car project?

A: It is admirable and as a competitor we looked at it also.

Q: Do you think it is a viable project?

A: I still don't believe it but maybe he can pull it off.

Q:  Do you think it will be viable at that point?

A:  I think a lot will depend on the taxation structure. Do not forget that when you are talking about a price of a car, you are talking about 40% - 50% odd that goes in taxes. If suddenly government changes that then the whole game changes. But I think he is committed.

Q: If you consider it then why didn't you probably perceive it at M&M?

A: Well, we did perceived it for a little while. We found the cost far way out and we still don't know how he is going to do it. But he might pull it or put it off.

Q: Deepak Parekh idealises you, infact in one interview he said Keshub Mahindra is my ideal. You are friends with Nusli Wadia and you stood by him very strongly when Bajoria was attempting that takeover at Bombay Dyeing. What about Dhirubhai Ambani? You have never been asked for your comment on what do you think of the Reliance Empire. But you were amongst the very few businessmen, I believe, who turned up when Dhirubhai Ambani was awarded the Wharton Medal. But again you never said much about Reliance. What do you think of it?

A: I do not intend to say.

Q: You must have at some point in time been his contemporary. Not in age but in business?

A: He was a great visionary, Dhirubhai.

Q: Do you think he didn't quite get his due?

A: No, I think he got his due. I think rightly or wrongly reputation got a bit sullied. But you cannot take away from his vision analysis strategy. I went to this function for two reasons. First because in an odd way, I knew him and it was out of respect for him. Second reason, I am a Graduate of Wharton, myself.

Q: The fact that you never got into that classy industrialist group that Bombay had and he was always treated as an outsider?

A: There is no such thing as a club. But there are a group of people who perhaps thinks differently and it is very difficult to break into that crowd. It is nothing to do with what you are worth, nothing to do with your vision or strategy. It is chemistry between people and I think that is what makes friendships. So maybe I didn't have that sort of chemistry with people that you are thinking about.

Q: You refused the Padmabhushan because of your inadvertent involvement in the Bhopal situation and the fact that you were at that point the Chairman of Union Carbide. You never reconsidered sort of accepting it again?

A: No, first it is not been offered. Second there was a reason why I did not accept. Tied up with a very unfortunate tragedy where I had nothing to do with it. I am sitting in Bombay, I am a non-executive chairman of the company. There is still a matter in the courts. So I said to myself how can the government speak with two voices. On one hand they are giving me the Padmabhushan, on the other hand they are prosecuting. That is the reason I did not accept.