Anand Mahindra Addreses the 67th Annual General Meeting (AGM) of M&M - 2013 | Mahindra Rise

🎥 Jul 01, 2013 📺 Mahindra Group ⏱ 11m 👁 927 views

Anand Mahindra, Chairman of Mahindra Group, addresses the 67th Annual General Meeting (AGM) of Mahindra & Mahindra Ltd. #MahindraRise #MahindraGroup #AnandMahindra #Mahindra&Mahindra About Mahindra Rise: A technology & innovation-led, global, federation of companies, that provides a wide range of products, services & possibilities, enabling people to Rise. To know more about our other initiatives visit - http://www.mahindra.com/riseforgood Subscribe to Our Channel: https://www.youtube.com/user/Mahindra... Facebook: / mahindrarise Instagram: / people_who_rise Linkedin: / mahindra...

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Transcript (23 segments)

Anand Mahindra0:06

Ladies and gentlemen, although I have participated in this annual general meeting for many years now and I know most of you personally, this is the first time that I really have the privilege of addressing you as the chairman of this company. So may I therefore request your permission to share some of my thoughts on the state of the economy and your company in particular.

I need to tell you at the outset about the company's performance in the first quarter of FY14. Gross revenues and other income of the company together with Mahindra Vehicle Manufacturers Limited—you have to see these two companies together in order to get a real picture of our operations—were about 10,801 crores as against 10,003 crores during the corresponding period last year, showing a growth of 8%. The net profit of the quarter is 997 crores as against 778.5 crores of the corresponding quarter last year, a growth of almost 28%.

So I'd like to take this opportunity to pause and to thank the board first of all, and then all my colleagues—almost 155,000 of them—for this outstanding performance, as well as all our partners in our supply chain, our dealers, our suppliers. All of them have had a hand in what I believe is a standout performance.

As far as the other companies in the group are concerned, the group's recent acquisition SsangYong Motor Company Limited, with a 26.8% growth in consolidated revenues and 138% growth in results, broke even for the first time this past quarter since the acquisition two and a half years ago, and it returned a profit after tax of 41 crore rupees.

The performance of Mahindra Finance, with a 32% growth in consolidated revenues and an 18% increase in profits, and that of Mahindra Lifespaces, with a 46% growth in consolidated revenues and 16% growth in profits, were also noteworthy.

In our fledgling two-wheeler business, we seem to have hit the target with the launch of the Centuro commuter motorcycle, which currently has a waiting list, and I'm sure all of you had an opportunity to see it on display outside. In the current quarter, Tech Mahindra successfully completed the merger of Mahindra Satyam with itself to become the fifth-largest IT company in the country.

So ladies and gentlemen, I really hope that these results bring you some cheer at a time when the general economic environment appears to be one of gloom. There can be no two opinions about the fact that the country is facing a serious economic crisis. There are very real specters that we face: the specter of galloping fuel costs, the specter of the falling rupee, the specter of inflation eroding growth and a possible return to the old Hindu rate of growth, as we termed it.

But permit me to recall what Abraham Lincoln is supposed to have said—that if you look for the bad in man, you are bound to find it. Now I suppose the opposite is equally true: that if you look for the good, you're bound to find it as well. And I do believe that there is a glimmer of hope on the horizon. There is one very fleeting window of opportunity available to all of us to kickstart a return to the growth trajectory. And that glimmer of hope, frankly, you experienced on your way in here—it's the bumper monsoon.

The monsoon with which we've been blessed this year—if agriculture does well, food inflation could come down, rural incomes could go up, and this could revive demand for the goods and services that industry provides. In fact, our chief economist Veena Mishra coined a delightful phrase for this opportunity that we have, and she called it the 'green umbrella.'

What she says is that the good monsoon provides us with a green umbrella which we can use temporarily to ward off the economic downpour—a green umbrella under whose shelter we can, if we have the will, plant the seeds which grow into the green shoots of revival. I believe we can use this respite to kickstart a new cycle of growth.

The most important thing is to use this breathing space to put in place a structural, long-term approach to growth, because what we need most for sustainable growth is to unshackle the supply side. Economists estimate that India's GDP could rise by as much as two percentage points if we address supply-side challenges on roads, railways, ports, and power.

What we need is a frontal assault on all the bottlenecks, all the regulations and disincentives that can strain the supply side in all key sectors—manufacturing, infrastructure, education—and along with a predictable tax regime, this is what we need in order to attract global investments and local investments, in order to create jobs, raise exports. So I cannot say it emphatically enough: let us use the green umbrella to unshackle the supply side.

If that happens, a lot of good things can flow. The current account deficit could be addressed by rising exports, and over a period of time, the rupee value will right itself. The specter of inflation too will be curbed simply by the production of more goods. Now I admit this is not going to happen overnight, but the problem that we've created for ourselves is a deep-rooted one, and if we make the right structural changes, we can put India back on the world stage.

Let me now come to our company and our group. We decided to use Abraham Lincoln's philosophy here too, and to look for silver linings. And ironically enough, we found that the environment which I just referred to—this very economically constrained environment—was the same environment in which Mahindra grew and thrived.

Now we evolved, of course, and although since the '90s we've worked hard to adapt to an outward-looking, global mindset and we've competed successfully against multinationals, the fact still is that we are a group with our roots deeply embedded still in Indian soil, and we know how to thrive under such constraints.

So as we analyzed each of our businesses, we surprised ourselves with the competitive advantage nearly all of them possessed, particularly in this apparently depressed environment. Let's take the falling rupee for example. Now it's a major macroeconomic concern, but it works to the benefit of our IT business and to all our exports across the board—be it auto, tractors, two-wheelers.

The advantages of a low rupee can be reaped by our hospitality business. I believe more and more Indians are going to holiday in India as opposed to going abroad, and that will benefit the 44 resorts we have today. The falling rupee, as we all know, attracts NRI investment into real estate, which will help Mahindra Lifespaces. And we have a very robust business of creating SEZs, which will be required now to build the platform for the critical exports that we require.

So similarly, inflation and rising prices also steer customers towards some of our other businesses. Our used car business, for example—Mahindra First Choice—is showing 30% growth as car purchasers economize. And for financial businesses like Mahindra Finance, inflation has an upside since their capacity to provide liquidity is highly priced today and their assets increase in value and liabilities depreciate.

The green umbrella, of course, provides a major turbocharger to our tractor business as well as to our newer solar power, micro irrigation, and generator set businesses. These are all businesses that we are involved in which tap the burgeoning rural markets, and all of these are Mahindra Group businesses in which you—all of you, ladies and gentlemen—have a stake and a share.

So let me put a stake in the sand and clearly state that we are bullish about our future, and we will continue along the path of investing in that future. We are planning 10,000 crores of investment in the next three years, including a new automotive plant. And our past experience shows that this aggressive approach does pay dividends.

You will recall that in 2008, when the economy was slowing down perceptibly, yours was one of the few companies that continued to invest, and that investment is one of the major reasons why we significantly outperformed industry over the last two financial years. Today as well, despite the difficult situation, we will continue along our investment path—not only investments in capacity but also in research and development. We will invest, however, with an even greater focus on the frugality and the efficiency of that investment.

So in summary, it's our belief that the Mahindra Group is well prepared to take on a challenging environment such as the one we find ourselves in. Companies like ours that are well integrated in India and have high domestic content will ride out the situation, and we will protect our margins better than many of our competitors who have higher import content. And multi-business groups like ours, as I just demonstrated, also are better positioned to leverage the upside of difficult situations.

So I think your company has both the will and the means to sustain growth. And let me pledge again, as I did in my letter to you, that your company will continue to strive to outperform and to justify your trust in us.