Yes, there is some work to be done in a few areas but that is par for the course at this point and we are essentially seeing the outcomes that result from the efforts that all our associates have put in and that is starting to deliver results for us."This momentum is one that should continue because as I said, we are building a company for the long term and all our businesses today essentially firing on all the cylinders. Yes, there is some work to be done in a few areas but that is par for the course at this point and we are essentially seeing the outcomes that result from the efforts that all our associates have put in and that is starting to deliver results for us," says Anish Shah, Group CEO & MD, Mahindra Group.
It has been a fantastic patch for your shareholders. I was looking in the morning, the stock is up 90% in last one year, that must be making you happy, right or very happy? Anish Shah: It has been a great year and it has been one that series of years actually where we have built the company. For us, it is important to build it in the right way for the long term. So, while we do get a lot of satisfaction to see that growth over the last year, I look at it more as a step in the right direction.
So, this momentum will continue? Anish Shah: This momentum is one that should continue because as I said, we are building a company for the long term and all our businesses today essentially firing on all the cylinders. Yes, there is some work to be done in a few areas but that is par for the course at this point and we are essentially seeing the outcomes that result from the efforts that all our associates have put in and that is starting to deliver results for us.
The economy is slowing down and Mahindra & Mahindra is growing. You should be growing in line with the economy, but you are going against the economy. Why is that? Anish Shah: So, if we look at the last four to five years, we have seen lots of challenges. We have seen COVID, we have seen all the supply chain issues, semiconductor issues for the auto industry. We have seen growth issues as well. So, from that standpoint, we believe that if we build a truly strong company, then it has to grow much faster than the economy because if you can create customer value, if you can deliver that value in a way that the customer experiences a wow every time we deliver that, it is really going to enable us to gain market share and that is what is driving the growth of our company right now.
The unique positioning of Mahindra & Mahindra has been market share and leadership in the SUV market and in the tractor market. I will start with the success story of SUVs. It has been a resounding story which needs no introduction. You are growing in double digit, the industry is growing in single digit. At what point in time the base effect and the general environment of industry could hit you? Anish Shah: So, we have a 23per cent market share in SUVs. We have a 44per cent market share in tractors. We have a 49per cent market share in LCVs. So, in SUVs we still have a long way to go. There is a lot more share that we can pick up and for us it is creating outstanding products and what we have just launched recently in electric vehicles has captured the imagination of customers and the feedback we get is very-very strong.
So, therefore, we do not look at industry growth rates at this point in time. For us it is about how can we create that product for the customer that enables them to take a product at a much faster rate than industry growth.
While your market share is 23per cent, the SUV market share in the overall kitty is about 50per cent plus. Historically, we have seen that when a product category goes between 55 and 60, it peaks out in terms of penetration in market share. So, could that be a challenge for you? Anish Shah: We still have again a long way to go. So, from there, yes, SUV may peak out at 60per cent. It may not because there are different forms of SUVs coming in now as well and the vehicle really offers a lot more to the customer and which is why we are seeing that growth in SUVs.
But beyond that, in any category, it is about consistently delivering a very high quality of products and that is something that our team has been able to do over the last few years. It has not been one product that has been a huge success.
There have been a series of them and we have seen the kind of customer feedback and kind of customer bookings that we have got for every product and that is really what has driven growth in auto business.
Discounts are back and you can now, as a customer, demand your price when you are buying a car. What has been your experience? Are you giving discounts which are bigger than what you have ever given? Anish Shah: Well, just look at one factor. In the last four years, no one has asked me for, can you help me get a better discount? The questions have always been, can you help me get my car faster? And the whole narrative from discount has really moved to getting the vehicles. And that is in one way a positive for us as well as a negative because we have not been able to fulfil that part of customer demand because it has been far greater than what we had expected and we have tripled capacity, we are putting in more capacity as well, and that has helped us get much better on this front. But there is still a little more we have to do on that.
So, are you confirming to me that there is still a waiting when it comes to Mahindra products? Anish Shah: There are some products where there is still a waiting, yes.
And what is the average wait? Anish Shah: It differs by product and by variant. But we have tried to keep that down to ideally not more than six months for anything, but there are some that are slightly over that at this point.
Mahindra & Mahindra,they have really captured a customer's imagination from high end to low end to entry level. How have these new launches helped you? Anish Shah: The new launches have really changed the perception as well in terms of the kind of quality of products that we can deliver. And by we here, I mean not just Mahindra, but also India. And today, we have got R&D in India. These are made in India vehicles. And a lot of feedback that we get is that these are comparable with the best vehicles around the world and that is a very proud feeling to be able to create that quality for India, because it is changing the perception of where India stands on the global map and this is what will enable manufacturing in India at scale because for us to be able to build world class products in India and then export them to markets around the world is going to be a key step forward in meeting the Viksit Bharat goals that have been laid out, which are very ambitious and one which I feel are great from an Indian standpoint.
You have always stated in the past that we will let the customer decide what they want. We will make world class products and the customer will decide whether they want an ICE engine, they want an EV engine. The fact that you have had good launches in the last couple of days in the EV portfolio, are you getting a sense that which way the customer is ready to tilt or pivot? Anish Shah: I believe that the customer will continue to make those choices and some will prefer ICE, some will prefer EV. It is the same question that had come up in diesel versus petrol and there are some customers that will continue to prefer diesel, some will continue to prefer petrol, some will prefer EV. The good part is that the quality of all of these vehicles is much higher now.
Diesel vehicles at one point in time had the stigma around emissions but with BS6 coming in, the emission norms for diesel are so stringent that the quality of the vehicle is very-very good and the emissions are very low at this point in time.
So, it is really a customer choice on which powertrain they prefer and for us as a manufacturer, it is being able to deliver high quality products in each powertrain.
I respect that but the fact that you will have to start planning your capex in investment would be based on your initial understanding of the market. If you think EV will do well, you will tilt your capex there. If you think ICE will continue to dominate, you will have to put your capex there. Where are you planning your incremental capex within the autos? Anish Shah: So, for us, it is about having a set of products, it is about new launches, and then the manufacturing capabilities. A lot of manufacturing is fungible because a paint shop is the same, whether it is an EV or whether it is ICE and similarly a lot of manufacturing lines are fungible as well. Yes, there are some changes in components that go in, so planning is important from that standpoint but that is where we continue to try and look at where customers are headed and then build capacities for that.
I am going to change gears in this case and change gears away from autos to the other businesses. I just want to bring this point out for our viewers that 2021 was all about getting the house in order, which is that identify businesses which you need, businesses which you do not need. Businesses which you do not need, you decided to part ways. 2022 was about identifying and growing the businesses you need. In that same time, you also incubated new businesses. So, do you think next two years would be about scaling up the businesses which are new? You are calling them growth gems, but I am calling them new businesses and they will start scaling up now? Anish Shah: So that is right. We started with essentially a focus on capital allocation because it was essential at that time and we spent about 15 to 18 months doing that. We exited a large number of businesses and that put us on a very good path to be able to pivot to growth. As we pivoted to growth, we identified our approach to different businesses we have, establish and benefit from market leadership in auto and farm across all segments that we play in, deliver full potential in Mahindra Finance and Tech Mahindra and build our growth gems and enable them to grow 5x over the next few years, that has worked very well. And for us over the last few months now we have started to take the next step which is deliver scale because we started to see many of our businesses grow at a fairly rapid pace and we now want to build 2 billion, 3 billion, 5 billion businesses from amongst our growth gems and we feel there is great potential to do that.
