This is my kitchen table and it's also my filing system. Over much of the past three decades, I've been an investor. The highest calling of mankind I've often thought was private equity. And then I started interviewing. Oh, I watch your interviews, Coach. I know how to do it. I've learned in doing my interviews how leaders make it to the top. I asked him how much he wanted. He said 50. I said, Fine. I didn't negotiate with him. I didn't know due diligence to have something I'd like to sell and how they stay there. You don't feel inadequate now because being only the second wealthiest man in the world, is that right?
One of the largest and most successful companies in India is the Mahindra Group, a family-owned conglomerate. I had a chance to sit down with the first person in 80 years to run that company who is not a member of the family, Anish Shah. I sat down with him to talk about how he's taking Mahindra into a different route, not only as an exporter to the United States and other countries, but also enhancing what it's doing in India.
So for those people that don't know that much about India, what is the Mahindra Group and what does it actually make today?
The Mahindra Group has been around for 80 years now. We operate in more than 20 industries in 70% of India's GDP. We make SUVs. We are the largest maker of SUVs in India. Light commercial vehicles, electric three-wheelers. We are the largest tractor maker in India. Farm equipment. And not just in India, but globally. We are the largest maker of tractors from a volume standpoint. We are in financial services, IT services. We are the largest in logistics, the largest renewable energy in India. In hospitality, in real estate and a number of other areas.
So when was Mahindra Group started?
1945. And this came together with three founders, the Mahindra Brothers and Ghulam Muhammad. When India and Pakistan partitioned, one would want to be the first finance minister of Pakistan. And that's when the two Mahindra brothers took it forward as Mahindra.
And today, what percentage of your sales are in India and what percentage are outside India?
We have about 70% in India and 30% outside.
As you look at India, is India in reasonably good shape financially and the economy is doing reasonably well?
India is in a very good shape and we strongly feel that India will grow 8 to 10% a year for the next 20 years. There are three key drivers of that. One is the demographics. India is the youngest country by far. The average age, the median age is 28.8 years as compared to the late thirties for China and the US, Japan closer to the late forties. And second is the reforms. The government has really put in a number of reforms in place over the past few years. Third is infrastructure, both the physical infrastructure. We are building nearly 40 miles of roads per day for the last ten years. We've got one airport coming up per month for the last ten years. We've got very strong digital infrastructure in place as well, which is, I would say, among the best in the world. So I look at all of these things. India, which has grown six and a half percent a year for the last 30 years, is going to make that jump to 8 to 10%, become the third largest economy by 2030 and by 2047, the forecast for India or the goal for India is to be at $32 trillion from a GDP standpoint.
India is the most populous country in the world.
It is the, in terms of the economy today in the world, it's in the top ten.
In terms of GDP, today it's number four and going towards number three.
Would you say that India has some challenges with the United States? Because as we talk, the United States seems to have imposed or at least says it's going to impose a tariff of 50% on Indian products. And I assume that's not going to be helpful to you.
That will not be helpful. But from an economy standpoint, it won't have as much of an impact because India is largely a consumption-led economy. However, this is one that is concerning because India and the US have had a very strong relationship and has been getting even stronger over the last few years. And therefore we are puzzled, to say the least at this point in time, and we hope that things will get much better as we go forward.
How much of your time do you have to spend outside of India?
I'd say about 30 to 40% because for us we're looking at the world as a market as well as potential for partnerships that can help us grow our India business.
Now, if the United States imposes a 50% tariff on things coming in from India, that can't be helpful. So how do you deal with that?
That clearly will not be helpful, but we see huge opportunity, David. It's not just about goods and services. So India and the US are roughly equal from services imported and exported. On goods, there is a deficit from a US perspective, but the real opportunity is for US companies to bring the technology to India to be able to do a lot more, for Indian companies to invest in the US and be able to bring its products here, which is what we are planning to do, and that we feel will come out as time goes on and will get to a much stronger place for both countries.
So it's the case that as we talk over the weekend, we saw a picture of Mr. Modi and President Xi and President Putin kind of acting like their soul brothers. Is that a surprise that India and China would be so close after the border disputes and the problems they've had? Or do you think this is a natural evolution?
I feel that India is very close to the US and has been for many years. India also has always been non-aligned and has believed that the world is one family. Vasudhaiva Kutumbakam is a phrase that's used in India. So while I can't comment on the politics as much, what I can say is that from everything that I've seen growing up, from living in the US for 14 years as well, that the India-US relationship has been really very strong and we've gone through hiccups in the past. We had that at the time of the nuclear tests that India did in 1998 and became much stronger after that. And we hope that this again is a hiccup that will get past and really establish a very strong relationship between the two countries which are natural allies.
Now, recently, President Trump said he helped to arbitrate a dispute between India and Pakistan, for which he has said maybe he should get the Nobel Peace Prize. Mr. Modi has said, well, it really wasn't quite that way. Do you know enough about that to say what actually happened? Is India and Pakistan, are they in dispute right now?
So I don't know about what happened there, so I can't quite comment on that part. But India is really focused on driving economic growth. That's the agenda the president has laid out and ambition. The prime minister has laid out a very ambitious plan around the vision for a developed India, and that is a plan for 2047, getting to 2047 with a $32 trillion economy.
Now, talk about agricultural product. You make what kind of agricultural equipment?
We make tractors and other farm equipment as well. Tractors. We are the largest in India with a 45% market share and the largest tractor maker by volume globally.
Is that for use in India or outside?
In India and outside. We've got a business in the US, which is the third largest tractor maker in the US for smaller tractors, which is less than a hundred.
And you manufacture them in India or the United States?
We ship kits to the US and assemble them here. So we have an assembly factory in Texas and that's where we put them together.
What other businesses are you around? You have automobiles, you've got, say, farm equipment. What else are you in?
IT services. It's a large business for us. And IT services makes up the majority of our employees in the US, along with the tractor business. Then we have financial services. We are the largest financial services provider for rural India. We've got hospitality, we've got 100 resorts in India. Real estate, logistics. We are the largest logistics company in India as well.
It takes a lot of expertise to do automobiles, I like farm equipment, hotels and isn't that a lot of different skill sets you need to have?
You need to have the skill set of getting good people and making sure that there's a right process in place for capital allocation, the right process for strategic thought and growth, and making sure that there's empowerment for all leaders, because that's the only way that this business works.
And you see a lot of Americans now coming to invest in India. I know my own company now invests a lot in India, but are a lot of other people doing that as well?
We see tremendous interest in India, and that's the reason I spend a lot of time in various geographies meeting with various companies who want to come to India and looking for partnerships with them and looking for that technology to be adopted in the Indian market.
If I wanted to invest in India, would you say it's a good place in which to invest as a financial investor?
A country that's growing 8 to 10% a year for the next 20 years would be a fantastic place. That's the choice that we are making as well. But we're investing not only in India but also in a few other parts of the world. The US being a specific area.
If I'm an American company and I want to invest in Asia, why would I want to invest in India over China without getting you banned from going back to China? Why would somebody want to invest in India over China?
India has a lot of similarities to the US. It's a democracy. It has rule of law, it's a capitalist society. And that's what a number of companies are seeing now. Many companies will look at a backup option for China as well. And some companies I know are looking at India as a primary option going forward.
Also, the biggest country in the world, population-wise was China, and now it's India. And China also has a very elderly population, relatively speaking, compared to India. Why are they so different?
India has evolved over time and India has realized that it has to drive capitalism because that is one way where everyone will get wealthier. And that's been a big benefit for India. It also never had birth control in any form, or rather in the form that China did, which was a one-child policy. And that I think is impacting China to an extent right now. With India not having had that, it has a natural population growth that we are seeing today.
Now, there are many companies in Silicon Valley that are run by people of Indian background. I think something like a third of the companies in Silicon Valley are run by people who came from India, either this generation or previous generation. So why is that? Why are so many talented people from India leaving India and going to Silicon Valley?
We have a lot of talented people in India as well. So it is just a function of the opportunities that folks get. It's also a great learning ground in the US. I learnt a tremendous amount in the US and that's something that benefits me as we are building a company that really is a global company at this point.
Historically, India wasn't, as I would say, hospitable to capitalism as maybe people in the United States would have liked. I think Indira Gandhi, when she was the head of India, probably was leaning more towards things that were not pro-capitalism. How has that changed in recent years under Mr. Modi?
That has changed dramatically and that is evident in the reforms that have been done and the mindset. The government is very focused on ease of doing business. It is pushing companies to get larger. For us, we have grown our market cap 12 times in the last five years and that really is a function of the opportunities that we see in India today.
Let's talk about your own background for a moment. So where were you born?
Mumbai. And were you educated there as a young boy?
I was. I did my early schooling in Mumbai. I went to one of the top institutes in India for an MBA, the IIM Ahmedabad, then worked with Citibank in Mumbai for a couple of years and came to the US for a PhD at Carnegie Mellon and continued to stay in the US for 14 years before going back to India.
What did your parents do?
My father and mother were both graduates from IIM Ahmedabad. My father spent most of his life with Pfizer in India and then founded the Indian Pharmaceutical Association and really helped Indian pharmaceutical companies come up to the level where they are today. And my mother was an entrepreneur in the late sixties and early seventies.
A younger sister who also was in the US for 20 years and is back in India now.
