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Anand Mahindra gets future ready

Mahindra Group chief Anand Mahindra has no doubt that mobility is changing and he's all set to leverage the considerable opportunities it offers

Published: Aug 5, 2017 07:43:04 AM IST
Updated: Aug 3, 2017 05:52:42 PM IST

Anand Mahindra gets future ready
Anand Mahindra says if you are only tasting success, it is pertinent to ask whether you are taking enough risks
Image: Courtesy Mahindra Group Communications

It is an unusually warm mid-July morning at Brooklyn, one of New York City’s five boroughs. The ominous dark clouds and thunderstorm that had descended on the city a day earlier have miraculously disappeared. These are ideal conditions for New York City’s maiden ePrix (at the Formula E Championship, electric cars, instead of gasoline powered internal combustion engines as in the case of Formula One, race for honours). The location of the race track is perfect too—on the bank of East River within the gaze of the Statue of Liberty and towering Manhattan skyscrapers in the horizon.  

The atmosphere is electric (pun intended) and the supporters are many. That is surprising. Formula E is less glamorous than F1. The cars are less noisy and not as fast—they touch a maximum speed of about 225 kilometres an hour unlike F1 cars that can go faster than 325 kilometres an hour. The whole race—43 laps of 1.947 km each—lasts just 45 minutes.

“I hope you guys bring us luck,” says a smiling Anand Mahindra, looking dapper in a white T-shirt and blue jacket and sporting his trademark Ray-Ban sunglasses. He had run into us (a group of journalists from India attending the New York ePrix at the invitation of the Mahindra Group) at the entrance of the race circuit.

He, of course, is referring to the Mahindra Racing team which is one of the 10 franchises that have competed in Formula E since its inception in 2014-15. Not that the team really needs luck. Its performance this year, in season three, has been good. Felix Rosenqvist, the team’s young driver, tasted his—and the team’s—first victory at Berlin. The other more experienced and former F1 driver Nick Heidfeld came third at Hong Kong, Monaco, Paris and Berlin. The team also earned two pole positions and posted two fastest laps. Both drivers are in the top 5 in the Drivers’ Championship with Rosenqvist ranked third and Heidfeld fifth. In the Constructors’ Championship, Mahindra Racing is placed third after Renault e.dams and ABT Schaeffler Audi Sport. At the New York ePrix held on July 15, the team was expected to carry forward its good showing.

Mahindra meets the team principal, Dilbagh Gill, and other officials for a quick chat at the pit, followed by a photo shoot with the two drivers. The four cars, prepped for the race, occupy much of the space: Each driver gets to use two cars as the battery charge is not enough to last the full race and changing the battery midway is too time-consuming. The cars are hooked to the control centre at the back of the pit where their essential parameters are being monitored. Technicians scurry around doing the final checks.

Anand Mahindra gets future ready
Mahindra Racing’s M3 Electro during New York City’s maiden ePrix this July
Image: Spacesuit Media

Mahindra is clearly upbeat. “Brooklyn has become the innovation hub for any field. I am talking not just about arts and performance that the place is known for. Take your profession. Vice Media, the digital media and broadcasting company, is located around the corner from here. They came here because Brooklyn symbolises the new world. For Formula E to come here is far more appropriate than racing around in the streets of Manhattan,” he says.  

He is glued to the monitors during the qualifying round; the outcome is mixed. Heidfeld finishes sixth, but Rosenqvist errs which costs him 1.5 seconds. He is starting the race at 17th position.

Mahindra’s keen interest in Formula E—translating into over 3 million euros spent by the Mahindra Group annually on the team—isn’t led by the glamour of motor racing. “It is a live technology laboratory for the future of e-mobility,” he tells Forbes India. “The divide between a normal car and Formula One car is wide but that is not the case between an electric car and a Formula E car.”

Formula E is not just about brute speed. The drivers have to strike a balance between speed, conserving the charge in the battery (they are allowed a maximum power output of 170 KW during the race) and ensuring the battery does not heat up (if it does, the power drops). Getting these factors right on the track will help Mahindra design and produce efficient electric vehicles for the road. “Everybody in the world is coming here [participating in Formula E] because it is a laboratory,” he re-emphasises. “By being here, the ecosystem of cutting edge-technology—like the developers of electric powertrains—knows us. In a way, we have a front-row seat to the technology change.”

This is important as Mahindra sees electrification of the powertrain as an opportunity for the pure-play Indian automobile company to leapfrog well-established multinational carmakers and become a global player. “As the world turns electric, it levels the playing field for challenger brands like us. Tesla was not known a few years ago but it is today a household name,” he says. “Why can’t one think of Mahindra making a major headway in becoming a global brand, taking advantage of this change?”

Naturally he is happy that the government of India has set an ambitious target of shifting to electric cars by 2030. “That one statement by the government has attracted the entire electric vehicle ecosystem into the country. This is both a desirable and feasible goal for India. The spectre of 1.2 billion people having their own [fossil fuel powered] car is a nightmare,” he says. “In India we suffer from poverty of aspiration and I am delighted that the government is setting stretch goals.” 

Anand Mahindra gets future ready
From left: Former F1 driver Nick Heidfeld, Mahindra Racing’s Team Principal Dilbagh Gill, Mahindra & Mahindra MD Pawan Goenka, Felix Rosenqvist and Anand Mahindra
Image: Spacesuit Media

We are seated in the sprawling media centre; teeming with senior group officials and other guests, it was impossible to have a conversation at the Mahindra lounge. He periodically excuses himself to check his phone. “My daughter is on her way here,” he explains.

Our conversation then turns to the sort of support he expects from the government for electric vehicles to take off in India. “We will need transitional support. We should not have a situation where the government will have to give subsidies forever,” he says. He points to China where the government subsidises up to 60 percent of the price of an electric car. “How long can that continue? This has meant that players who should not survive are surviving,” he adds. In fact, Mahindra is looking for a subsidy that gradually tapers off. “Only then will the best-in-class survive,” he says. “All I am saying is that till the price of batteries declines and the sticker price drops, the government should [provide] support with a subsidy that declines over time.”

Preparing the group for a changed world has not been an easy ride for Mahindra. His focus in the last decade or so has been to take Mahindra & Mahindra (M&M), the flagship company of the $18 billion-group he oversees, global. The company already has the scale. After all, it is the world’s largest manufacturer of tractors in volume terms. It is also a significant player in the Indian SUV passenger vehicle space with brands such as Scorpio, Bolero, XUV 5OO and others. But he understood fairly early the need for plugging the expertise gap when it comes to product development; he also realised that an overall strategic shift to leverage emerging opportunities was required to take the company forward.

M&M invested over `650 crore to set up Mahindra Research Valley near Chennai and staffed it with 1,500 young engineers. But young minds need handholding and that expertise was lacking in India as product development in the automotive space here is still nascent. So he chose the next best option—of setting up a product development centre in Detroit where the average experience of the team is over 25 years. He also pushed for strategic acquisitions such as Italian auto design firms Pininfarina and GR Grafica Ricerca Design. He is also leveraging the expertise at South Korean auto player SsangYong which the group acquired in 2010. They work together to develop tractors, off-road vehicles and SUVs.

Strategically, Mahindra is also giving a new direction to M&M’s tractor business, which he has mandated to go beyond tractors and beyond India. The company is looking at farm equipment—which is, at $95 billion, even bigger business than tractors ($55 billion) globally—as a big opportunity. The company has been making acquisitions to gain access and technology in this space. In October 2015, it acquired Mitsubishi Agricultural Machinery which makes rice harvesters, transplanters and lightweight tractors. In March 2016, it acquired Finland-based Sampo Rosenlew, a specialised grain harvester manufacturer. This was followed by the acquisition of Turkish farm equipment company Hisarlar. The ratio of tractor and non-tractor revenue is expected to change from 96:4 in December 2015 to 85:15 in December 2017.

The geographical spread is expanding as well. The company is making its mark in the US market where it is third in terms of market share for tractors below 150 horsepower (HP). According to Mahindra, he may look at setting up a manufacturing facility in the US soon to manufacture off-road vehicles and tractors. The company has also forayed into Canada, Brazil and Mexico apart from Turkey and Egypt. Today, the revenue mix of India and international markets is 70:30; it is expected to become 50:50 within the next five years.

In the passenger vehicle space, he is not just focusing on opportunities in electric vehicles but also on autonomous vehicles and shared mobility. “Two years ago, at our annual general meeting, I had said that the first vehicles that will go autonomous are the tractors. They have no issues with traffic and have to just go straight. We are leaders in that segment and we intend to lead the game,” says Mahindra. “Along with Mitsubishi Mahindra Agricultural Machinery in Japan, we are working to be at the forefront of autonomous tractors.”

He has also placed large bets on understanding and taking advantage of the shared economy that is fast transforming the automotive sector. In fact, he was the first automotive honcho to openly admit the challenges the car aggregators posed to car manufacturers. “If we have to survive we have to think disruptively. We should not only think of ourselves as makers of vehicles but also as providers of solutions. We will invest in the shared technology, either through partners or incubate some of our own,” he says. “We have made some investments like in Scoot Networks in America and we will grow with them.”

He also believes that ride-sharing will inevitably go electric and will eventually be facilitated by autonomous vehicles. The group started GenZe—which makes electric scooters—to challenge urban mobility by creating what the company calls transformational solutions. Over 1,000 of its scooters are used in the US by fleet operators to deliver goods.

I try to provoke him by asking if product failures upset him in obvious reference to M&M’s latest products, KUV and TUV, which have failed to capture the imagination of the customers. He is unfazed and his response is matter-of-fact. “Failure is not something you want to keep encountering, but at the same time, the companies that do not fail are not doing enough. If you are only successful, it is pertinent to ask whether you are taking enough risks,” he says. “I don’t get dismayed by failures, but I do if we do not learn our lessons from them.”

Elon Musk wants to save humanity by colonising Mars. Jeff Bezos wants to habitate space and start heavy manufacturing there to preserve Earth. What is your larger purpose, I ask him as the conversation draws to a close. He laughs, surprised by the question. “My higher calling is firmly rooted in this planet and it is in our lifetime,” he says. “There is a much greater job of aligning the companies with the aspirations of the people. Ever since Occupy Wall Street, the divide between the corporate world and the people has only grown. To me, building companies that can inspire trust and gain the confidence of consumers is as important as making factories on the moon.”

He gets up, offers a firm handshake and rushes off to witness the race which turns out to be a forgettable one. Hit by mechanical failure, Heidfeld has dropped out while Rosenqvist, who initially gained over 10 places with some smart driving, has locked his brakes and spun at a sharp turn ending up at the bottom of the pack. So much for the luck Mahindra hoped we would bring.

(This story appears in the 18 August, 2017 issue of Forbes India. To visit our Archives, click here.)

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