CASE STUDY OF ANAND MAHINDRA

For many Indian businessmen, the reforms of July 1991 spelt the end of a cozy way of life.
For Anand Mahindra, it nearly meant the end of his life. Striking workers of the Kandivali
factory of Mahindra & Mahindra, or M&M, in Mumbai had gheraoed him in his plant office
and were baying for his blood. Mahindra, then 36 and deputy managing director of a
company known for its tractors and the Jeep, had said there would be no Diwali bonus
unless workers stepped up productivity. Mahindra's ordeal lasted for nearly four hours,
before the workers calmed down.

Mahindra, who had been brought in earlier that year from Mahindra Ugine Steel, another
business controlled by his family, held his ground and the workers yielded, agreeing to
increase productivity. The 1,230-odd workers at the engine factory in Igatpuri, 125 km
northeast of Mumbai, who had decided not to make more than 70 units a day even if this left
them enough time to play cards, also gave in.

Productivity gains ranged from 50 to 150 per cent: Bharat Doshi on the
gains after the 1991 strike
Three years later, around half that number were churning
out 125 engines a day. "Productivity gains ranged from
50 to 150 per cent," recalls Bharat Doshi, Group Chief
Financial Officer, who has been with the group longer
than his boss.

Today, Mahindra does not worry as much about productivity as about what his next big
project will be. Another passenger car, a sports utility vehicle, a truck - or an aircraft?
Twenty Diwalis since that day in 1991, the group's businesses span all these - and holiday
resorts, financial services and defence. When he does not want to start from scratch - which
he did with the Scorpio utility vehicle in 2002 - he buys a company, as he did with the
Reva electric car.

EXCLUSIVE: Anand Mahindra on the new 'Rise' campaign

In the past four years, he has acquired Punjab Tractors (doubling M&M's share of the
tractor market and making it a global leader), Satyam Computer Services, Reva, two-
wheeler maker Kinetic, and South Korea's automaker Ssangyong.

Mahindra's goal seems to be global leadership for his group, which in 2010/11 reported a
net profit of over Rs 4,800 crore on sales of nearly Rs 37,000 crore. In 1991, group
revenues are estimated to have been around Rs 1,520 crore, based on a Prowess
database search of group companies.

Keenly watching him will be the stock market, which has pushed up his flagship M&M's
stock price by 995 per cent since Mahindra took charge, despite two stock splits since 2005.
In the same period, the Bombay Stock Exchange's 30-share Sensex, which includes M&M,
has risen 794 per cent.

In a report prepared after M&M's first quarter results, Mumbai brokerage Kotak Institutional
Securities upgraded the scrip to a 'buy', citing robust demand for both the Scorpio and
Bolero utility vehicles as well as the new Maxximo and Gio light commercial vehicles.

Mahindra's indigenous anti mine vehicle

Look back across some 16 years, and the picture was not
always so gung-ho. Mahindra's record in joint
ventures has been far from stellar. In 1995, hungry for
partnership with a multinational that would bring in much-
needed technology and management expertise, his group
tied up with Ford Motor of the US but the venture petered
out in a few years after its first car, the Escort, flopped.

Since then, Mahindra has not had much luck with two
other partnerships in automotives. M&M's venture with Illinois, US-based Navistar
International has not gained traction because of delays in rolling out medium and heavy
commercial vehicles and the competition from new, low-cost rivals such as AMW, the
Gujarat-based truckmaker.

PROFILE: The tweeting CEO

Mahindra Navistar reported a loss of Rs 186 crore last year. A bigger setback for M&M has
been the Logan, a mid-size sedan that is the offspring of its venture with France's Renault.
The car flopped and the partners parted ways after four years of friction.

We want to do to regional aerospace what our vehicles have done to rural

transport: Hemant Luthra
M&M is selling the remaining units as its Verito, while
Renault is trying to make its mark in a higher segment
with Fluence. M&M's big non-auto joint venture, the one
with British Telecom in software services, forged before
Mahindra Ford, had a reasonable run before BT reduced
its stake in 2010 to around 30 per cent.

Mahindra counts these setbacks among the invaluable lessons he has learnt. "Everybody
enters a joint venture with a what's-in-it-for-you-and-what's-in-it-for-me attitude," he says.
"[Before the venture with Ford] we had no experience in making a hard-top vehicle, or in
modern methods of manufacturing." And then he drops the punch line: "The 300 people
who put the Ford Escort together were the first ones to work on the Scorpio. It can be
argued that we would not have been able to make the Scorpio without the Ford joint
venture."

SPECIAL: When Anand Mahindra impressed alma-mater Harvard Business School

Even with the Mahindra-Renault JV, Mahindra believes that both companies have benefited
from the experience. The story of Scorpio, M&M's big-selling utility vehicle, is now a case
study at Harvard Business School, where Mahindra did his MBA in 1981. (He had majored
in film-making and photography from the same university.)

In addition to the learning from Ford, Mahindra knew he needed the right people for the
Scorpio project. He turned to Pawan Goenka, who had come from General Motors in 1993
as General Manager for Research and Development but was on the verge of leaving.

Goenka, a specialist in engine technologies, was riveted by the audacious plan to develop a
vehicle from scratch in India and bought into Mahindra's dream. He spent the next few
years learning other parts of automotive technology and building a team of skilled young
engineers.

In 2002, the Scorpio was born at a total project cost of Rs 550 crore. There were many
remarkable things about it. First, Indian companies were not known to develop their own
vehicles. Second, it was developed at a tenth of the cost that a large manufacturer would
have incurred. And, the Scorpio has become a platform, first for the Xylo in 2009 and then
for the XUV5OO, slated for launch in India and South Africa later this year.

Mahindra acquisitions

2007
In July, M&M buys 64.6 per cent of Punjab Tractors for about Rs 1,400 crore. Retains the
Swaraj brand and turns the company around in two years. In 2008/09, just before it is
merged with M&M, Punjab Tractors reports a profit t of Rs 200 crore. The Swaraj brand
has increased its market share from nine per cent in 2007 to 12 per cent today. Overall,
M&M had 42 per cent of India's tractor market in 2010/11.

Selling over 202,000 tractors a year, it is the world's largest tractor company by volume.
Farm equipment is the single largest contributor to M&M's revenues.

2008
M&M buys an 80 per cent stake in Kinetic Motors' two-wheeler business for Rs 110 crore.
This is run as a separate company - Mahindra 2 Wheelers. In 2010/11, the company had
7.6 per cent of the scooters market, against 4.8 per cent the year earlier. Motorcycle sales
have been poor, but Mahindra 2 Wheelers is the first Indian company to take part in the
MotoGP motorcycle racing series and has enjoyed some success in the 125cc category
with riders Marcel Schrotter and Danny Webb.

2009
Tech Mahindra, which began life as a venture with British Telecom and later became the
information technology business of the M&M Group, buys Satyam Computer Services in
June 2009 when the government puts Satyam on the block following revelations of an
accounting fraud committed by its Founder-Chairman B. Ramalinga Raju. Tech Mahindra
pays an estimated Rs 2,650 crore for a 51 per cent stake. Rebranded as Mahindra-
Satyam, the new company declares a consolidated net profit of Rs 225.2 crore for the
April-June quarter of 2011/12, its first since the takeover.

May 2010
Mahindra buys a 55.2 per cent stake in Reva Electric Car Co, most of it from Reva's (in
the pic) promoter. It also brings in fresh equity. Even though Mahindra-Reva made a loss
of Rs 28 crore in 2010/11, Pawan Goenka, President of M&M Automotive, feels that M&M
will benefit in the long run from Reva's electric vehicle technology, and the acquisition will
revive M&M's own alternative propulsion projects. Mahindra-Reva plans to launch a new
vehicle, NXR, soon.

November 2010
M&M acquires a 70 per cent stake in South Korea's Ssangyong Motor Co for about Rs
2,100 crore, including bonds. It is the largest outbound deal by M&M, which now plans to
introduce Ssangyong vehicles in India in 2012, develop vehicles jointly, as well as use
Ssangyong's marketing and distribution reach in Russia, Latin America and Western
Europe to realise its ambitions of becoming a global major. Ssangyong closed the 2010
Jan-Dec financial year with a net loss of Rs 220 crore.

Other acquisitions
Mahindra Systech has been acquiring automotive component and aerospace companies
aggressively since 2003. Several were privately held firms and no values were given.
Among them: Schoneweiss (axle-beam manufacturer, Germany); Jeco Holding (forgings,
Germany); DGP Hinoday Industries (castings and ferrites, India); Falkenroth (forgings,
Germany); Stokes Group (forgings, Britain); Amforge Industries (forgings, India); Plexion
Technologies (engineering services, India); Metalcastello (castings, Italy along with ICICI
Venture); SAR Transmissions (gears, India); Engines Engineering (automotive, Italy);
Gippsland Aeronautics and Aerostaff Aircraft Manufacturing (aerospace, Australia).
 Anand Mahindra with a Mahindra Navistar truck
The Scorpio "did wonders for the Mahindra brand in
urban India", says Mahindra. It also became the group's
flagship for expansion into new markets. It is sold in
several West European countries as the 'Mahindra Goa'
and uses its Scorpio moniker in Africa, where it can be
found from Cairo to Cape Town. It might be outsold by
the older and cheaper Bolero in India, but combined with
exports, some 60,000 Scorpios were sold in 2010/11.
Though a plan to sell Scorpios in the US failed in 2010,
M&M plans to make a fresh push in the world's largest vehicle market with the Scorpio and
the XUV5OO shortly.

More than just sales and profits, the Scorpio platform has given M&M a huge boost as
value-seeking customers turn to it. "In comfort, the Innova is far ahead for city driving but
the Scorpio scores on mileage and cost, as also service quality at dealerships," says
Ravinder Chauhan, co-owner of Delhi-based MS Engineering, a construction contractor with
Indian Oil. Chauhan's family owns both an Innova and a Scorpio.

Back at M&M, Goenka does not personally design vehicles anymore, but is the top dog for
the group's automotive and farm equipment businesses. One in two tractors bought today in
India is badged M&M after the 2008 Punjab Tractors buy, despite several international
players - New Holland and John Deere among them - having entered the market in the past
few years. (See Mahindra Aquisitions) Two joint ventures in China, one with Jiangling and
the other with Yueda Yancheng, have made M&M not just the second largest tractor maker
in that country but also the biggest in the world by volumes. In the US, it sells tractors made
by manufacturers in South Korea and Japan under its own brand. Next: Africa and global
leadership.

Giving Indians wings

Millions of utility vehicles and hundreds of thousands of tractors wearing the Mahindra
badge dot the country's roads and farms, respectively. Will Mahindra one day similarly
own the skies? In 2008, Systech, the components arm of the Mahindra Group, bought
Australia-based GippsAero. The Gipps Airvan, an eight-seater by GippsAero has had
limited success since the acquisition, with about 60 planes sold last year. In 2007, M&M
had bought Bangalore-based engineering services firm Plexion, which had several
aeronautical experts in its ranks. This led to a 2008 tie-up between M&M and the National
Aerospace Laboratories to build a four- to five-seater aircraft, the NM-5. It is expected to
take its first flight before the end of 2011. The prototype is being developed at GippsAero's
facilities in Australia.

Hemant Luthra, President, Systech, says the experience of making aircraft will also help it
gain business in the burgeoning civil and defence markets for aerospace components.
Anand Mahindra believes Indians would take to the skies in droves if flying became
affordable. The NM-5 achieves to do just that, with a target price of around Rs 2 crore.
The catch? India's civil aviation rules prohibit a single-engined aircraft from carrying four
or more fare-paying passengers. That is why the Airvan and the NM-5 are not in Indian
skies as yet. But Luthra is confident the rules will be changed, and Mahindra's vision of
thousands of Indians crisscrossing the country in small planes will come true.

We have appointed only six people from here in Ssangyong and the CFO
is the only top Indian there: Pawan Goenka
Each of M&M's automotive acquisitions over the last
three years was significant in its own way. Reva, the
Bangalore manufacturer of electric cars that it acquired
for Rs 150 crore, is a technology play. "They have
competent technology, a well-regarded product and
ambitious plans. But they did not have the resources to
go forward," says Goenka. The beginning has been good.
Soon after M&M bought Reva, the government
announced tax breaks for electric cars, something that Chetan Maini - whose dream Reva
was - kept moping about but never got.

To be sure, there has been no such happy beginning for Mahindra Two Wheelers, the new
name given to Kinetic. While overall scooter sales doubled last year, they still account for
just a fifth of total two-wheeler sales in India. And, Mahindra motorcycles - the company
launched five models, including re-launches within a year - has not taken off even though
the market is growing and the brand is backed by Aamir Khan and Kareena Kapoor, actors
known for their Midas touch in movies and endorsements.

...we would not have been able to make the Scorpio without the Ford joint
venture: Anand Mahindra
In a recent interview to a television channel, Mahindra
agreed that he came into the market with the wrong
product, but vowed to strike back with a relaunch soon.

The really big bet at M&M is being played out in Seoul.

China's Shanghai Automotive Industry Corporation, or
SAIC, had acquired 49 per cent equity in South Korea's
Ssangyong in 2004. But sales collapsed as fuel prices
shot up, emission standards in its export markets became
stringent, and the global financial crisis erupted.

Faced with strikes and unable to cut costs, Ssangyong filed for bankruptcy in January 2009.
SAIC diluted its holding to 3.79 per cent in July next year. When M&M first announced its
intent to acquire Ssangyong, it was not without reason that its shares fell. But unlike Tata
Motors' acquisition of Britain's Jaguar Land Rover, or JLR, in 2008, which took time to turn
operationally profitable and left Tata with a pile of debt, the Ssangyong deal was smooth.

The target was free of debt, its operations profitable and it trimmed its workforce before
M&M came in. And M&M paid $463 million - some 60 per cent less than what SAIC had
paid in 2004.

Now, Mahindra's task is to win over the unions. "We have appointed only six people from
here in management roles in Korea, and the chief financial officer is the only top Indian
executive," says Goenka. The idea is to get the Ssanyong employees to believe in
themselves. Of the 120,000 vehicles Ssangyong produced last year, 65 per cent were
exported. But it is not just entry into new global markets, M&M will also develop all major
platforms in the future with Ssangyong and plans to start selling products from South Korea
in the Indian market next year.

As Mahindra strives to get Ssangyong back on the rails, he can take inspiration from his
success with Satyam Computers. Tech Mahindra, the Mahindra-BT joint venture, won
Satyam in an auction by the government, which had taken control after Founder and
Chairman Ramalinga Raju was accused of overstating key financial numbers. Mahindra had
actually reached out to Raju just weeks before the scandal broke. "He did not respond," he
says, tongue in cheek, "for now very-well-known reasons."

We took difficult decisions at Satyam but we made sure that everybody

was kept informed: Rajeev Dubey
Apart from dealing with tax issues, handling employee
morale at Satyam was the biggest challenge. As Rajeev
Dubey, M&M's head of Human Resources, says, Satyam
employees had no idea what the future was going to be.
"Yes, we had to take some difficult decisions, but we
made sure that everybody was kept informed;
communication was vital." No one will talk about it, but
the next step in harvesting synergies among the
Mahindra group tech businesses is to combine Tech
Mahindra and Mahindra Satyam in the future.

A management consultant who has worked with Mahindra closely says he has not seen an
Indian businessman with "a better left brain, right brain" combination - creativity in business
combined with a feel for numbers. In 2000, when Indian groups started buying global
assets, the Mahindra group was much smaller, with revenues of about $1 billion. "Not only
was he smaller than the Tatas or Birlas, his family's shareholding in group businesses was
relatively low making him more vulnerable than them," says the consultant. The consultant,
who works at a US management firm, requested he not be named.

This explains the heightened sense of caution with which M&M goes after acquisitions,
especially those with a higher degree of risk or of a size that may be difficult to digest. An
example is the group's decision to drop out of the race to buy JLR.

The Tatas, who had deeper pockets, bagged it. A strategy Mahindra uses to pare risk is to
rope in private equity, as in M&M's acquisition of Italian auto component maker
Metalcastello along with ICICI Venture. So too, it acquired Australian airplane maker
GippsAero along with Kotak Private Equity.

A takeover tycoon he may be, but Mahindra is not done with entering new areas on his own.
Looking at the promise in defence equipment, M&M has developed an urban patrol vehicle,
the Marksman, based on the Scorpio. Kutub Hai, a former Brigadier, who is the Chief
Executive of Mahindra Land Defence Systems, a joint venture with British Aerospace, says
the company can hope to get up to 20 per cent of the $100 billion defence market in the
coming decade.

The rise campaign

Rising to the top
How Mahindra's 'Rise' campaign came to fruition

In mid-2009, Scott Goodson, the founder and creative

head of StrawberryFrog, a boutique American
advertising agency, met Anand Mahindra in Mumbai.
Mahindra had appointed Global Vehicles as distributor
for its Scorpio sports utility vehicle in the United States, and Global had roped in
StrawberryFrog.

Goodson, who specialises in 'movement marketing', wanted to understand what Mahindra

& Mahindra was all about. He had been surprised by what he found. Most Mahindra's
managers, he noted, felt they were working for a higher purpose but seemed unable to
articulate it. Goodson told Mahindra boldly, "You yourself do not understand what kind of
company you are running."

Following months of research and interviews with all stakeholders, the 'Rise' slogan was
born. It emphasised three core principles - accept no limits, think alternatively and drive
positive change.

But Mahindra wanted this to be more than an advertising campaign. "Our core purpose
earlier was to prove that Indians are second to none," he says. But later M&M, having
acquired thousands of employees in Germany, Korea, China and elsewhere, needed to
redefine this.

Mahindra admits that not every employee will buy the 'Rise' idea. Surprisingly, employees
of Mahindra-Satyam were the biggest supporters of 'Rise', presumably because they had
suffered a serious identity crisis when their company's founder perpetrated a scam.

Ironically, Mahindra's plans for a US launch were scuppered by legal issues with Global
Vehicles. So while StrawberryFrog never got around to doing the advertisement it was
intended to do in the US, it has done a massive campaign in India.
Even more bullish is Hemant Luthra, President, Systech Sector, who heads the group's
component side and oversees the entry into aerospace. In 2007, he masterminded the
acquisition of Australia's GippsAero, which makes small commercial aircraft. Luthra has
also taken the company into a joint venture with National Aerospace Laboratories,
Bangalore, to develop a small aircraft.

Scheduled to take to the air soon, it is expected to be priced at Rs 2 crore. The cheapest
such offering in the market today costs Rs 5 crore. "We want to do to regional aerospace
what we have done to rural transport," says Luthra. Mahindra shares his vision of scores of
small planes taking off from towns across the country, with fares slightly higher than the
highest railway fares. That would fit in with M&M's new campaign: 'Rise - No Limits, Positive
Change, Alternative Thinking' .

Mahindra's 360-degree view of life - he has 350,000-plus followers on Twitter and adds
2,500 every week - had management thinker C.K. Prahalad, about a year before he died in
April 2010, dub his sprawl of businesses 'Fortress Mahindra', an empire that spans not just
a hundred countries but has valuable links in multiple industries.

Despite aggressively expanding the contours of his conglomerate - he prefers to call it a

federation - Mahindra, now 56, makes you feel that he has not really forgotten the day he
was confined to his office 20 years ago. "When you have stared down the abyss, you get a
sort of confidence," he says.

Please examine the case from Leadership view point and how he strategiged to make this
group into formidable conglomerate ? Also examine what kind Leader is he ? What kind of
leadership theories have relevance in this case study?