Normally, the only occasion the reticent Keshub Mahindra rises to make statements is when fellow directors and shareholders gather at the Birla Matoshri auditorium in South Mumbai every year for the annual general meeting (AGM) of Mahindra & Mahindra.
This year, too, at the 66th AGM next month, the 88-year-old chairman of M&M will answer direct questions from the company’s shareholders. Only, this will be the last such occasion, since he’s ceasing to be chairman right after.
In his first direct letter to his company’s shareholders in several years, Keshub Mahindra makes an emotional pitch in the company’s annual report, urging them to support nephew Anand Mahindra, currently vice-chairman and managing director, who is set to take over the reins.
“Over the past decades, on many occasions I have written directly to you when the occasion so warranted. This is one such occasion, since by the time you receive this letter my decision to retire as the non-executive chairman of your company will be a matter of public knowledge. At the board meeting, your directors accepted my wish to retire at the end of our AGM. They have elected Anand Mahindra to succeed me as chairman. I urge you to support him lavishly, as you have supported me over the years”, Mahindra said in the letter.
The senior Mahindra also warns about the oncoming rough weather bringing with it risks and crises, challenging the corporate world, while also advising the management team at M&M to be prepared for it. “The global macro environment is currently rife with risks: the probability of a major crisis in the Euro zone is high and rising economic recovery in the US is faltering, China is slowing and given political tensions surrounding oil, markets remain in a state of flux,” he said. Adding: “The company’s management team led by Anand will need to continue to be vigilant to successfully weather the rough economic terrain that lies ahead. I have the fullest confidence in their ability to do so.”
Mahindra has been a director of the company for 64 years, of which for 48 years he was the chairman. He is also one of the longest serving board members in India Inc, having joined the M&M board in 1948, two years after the utility vehicle market leader renamed itself Mahindra & Mahindra from Mahindra and Mohammed.
Under Keshub, M&M grew from just an assembler of the Willys Jeep in India to a manufacturer of automobiles to a federation of companies operating in a range of businesses such as tractors, auto components, information technology, real estate, financial services and hospitality.
The company also became the largest manufacturer of tractors in the world and the biggest producer of utility vehicles in the country. It is taking strides in new business areas such as aviation, defence, solar energy, two-wheelers, luxury yachts and organic food, to name some; it had also exited nearly a dozen businesses, including oil drilling and elevators.
In addition to macro economic headwinds, M&M faces a rising challenge from multinational companies in the home market, in segments where it has been the market leader. While Renault has just launched the Duster sports utility vehicle in the market, challenging the M&M’s Scorpio on price points, John Deere, one of the world’s largest tractor makers, is working on small capacity tractors to take on the range sold by M&M.
“Keeping in mind the high growth potential of the Indian automotive market, all OEMs (original equipment manufacturers) are actively investing in new product development and product technology upgrades. Multinational players are increasingly becoming India focused and developing products built around the needs of the Indian customer. With increased local sourcing and development taking place in India, cost structures of multinational corporations are becoming competitive,” a note from the company stated.
