Anish Shah

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0:38One of the largest and most successful companies in India is the Mahindra Group, a family-owned conglomerate. I had a chance recently 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? So David, the Mahindra Group has been around for 80 years now.

1:15We operate in more than 20 industries in 70 % of India's GDP. We make SUVs. We're 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. We were the largest renewable 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 Gullah Mahmoud.

2:00When India and Pakistan partitioned, Gullah Mahmoud went to be the first finance minister of Pakistan, and that's when the two Mahindra brothers took it forward as Mahindra and 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 percent a year for the next 20 years. There are three key drivers of that. One is the demographics.

2:37India's the youngest country by far. The average age or the median age is 28.8 years as compared to the late 30s for China and the US, Japan closer to the late 40s. 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're building nearly 40 miles of roads per day for the last 10 years. We've got one airport coming up per month for the last 10 years. We've got a very strong digital infrastructure in place as well, which is, I would say, among the best in the world. So as we look at all of these things, India, which has grown 6.5 % a year for the last 30 years, is going to make that jump to 8 % to 10%, become the third largest economy by 2030.

3:27And 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. How many people? 1.45 billion. It is, in terms of the economy today in the world, is it in the top 10 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. 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.

4:11However, this is one that is concerning because India and the U.S. 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 percent because for us, we're looking at the world as a market as well as a 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.

4:50So how do you deal with that? That clearly will not be helpful, but we see a huge opportunity, David. It's not just about goods and services. So India and the U.S. are roughly equal from services imported and exported. On goods, there is a deficit from a U.S. perspective. But the real opportunity is for U.S. companies to bring that technology to India, to be able to do a lot more. For Indian companies to invest in the U.S. 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 we'll get to a much stronger place for both countries.

5:24So 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 other problems they've had? Or do you think this is a natural evolution? I feel that India is very close to the U.S. and has been for many years. India also has always been non-aligned and has believed that the world is one family what Sudevi Kutambakam 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've had that at the time of the nuclear tests that India did in 1998, and we came out stronger after that.

6:26And we hope that this, again, is a hiccup that we'll get past and really establish a very strong relationship between the two countries who are natural allies. Now, recently, President Trump said he helped 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 can't quite comment on that part. But India is really focused on driving economic growth.

6:59That's the agenda. The president has laid out an ambition. The prime minister has laid out a very ambitious plan around the Viksit Bharat or a devil of India. And that is a plan for 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 U.S. which is the third largest tractor maker in the U.S.

7:41for smaller tractors which is less than 100 horsepower. And do you manufacture them in India or the United States? We get kits to the U.S. 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 in? 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 U.S., along with our tractor business. Then we have financial services. We're the largest financial services provider for rural India. We've got hospitality.

8:18We'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, farm equipment, hotels. 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. There's a right process for strategic thought and growth and making sure that there's empowerment for all the leaders because that's the only way this business works. And do you see a lot of Americans now coming to invest in India?

8:55I 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 a choice that we are making as well.

9:29But we're investing not only in India, but also in a few other parts in the world, the U.S. 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 U.S. 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.

10:06The 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. But India, not having had that, has a natural population growth that we're seeing today.

10:49Now, 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 around in the U.S. I learned a tremendous amount in the U.S. and that's something that benefits me as we're building a company that really is a global company at this point.

11:26Historically India wasn't as I would say hospitable to capitalism as maybe people would 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 the recent years under Mr. Modi? That has changed dramatically and that is evident in the reforms that have been done in 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.

12:08Let's talk about your own background for a moment. So where were you born? In Mumbai. Mumbai. And were you educated there as a young boy? I was. I did my early schooling in Mumbai, 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 U.S. for a Ph.D. at Carnegie Mellon and continued to stay in the U.S. 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.

12:54And my mother was an entrepreneur in the late 60s and early 70s. Do you have siblings? A younger sister who also was in the U.S. for 20 years and is back in Indiana. So you grew up in India, you got your education there. Why did you decide to come to the United States to get a Ph.D. from Carnegie Mellon? One of my aspirations was to be the CEO of a U.S. company in India. And to do that, I felt I needed to understand the U.S. better, get a U.S. degree. And that was the reason to come to the U.S. And what was your Ph.D. in? Corporate governance. It was within the accounting department, but my advisor was very keen on corporate governance, and that is the focus of my Ph.D.

13:32So after you got your Ph.D., do you say, I'm rushing back to India, or did you stay in the United States for a while? I stayed in the U.S., got a job with Bain. Boston, was there for three years, and then with GE Capital for a long time in the U.S., and then went back to India with GE Capital as a CEO in India. So you're working for GE Capital. At that time, I assume Jack Welch or somebody like that was running GE? Jeff Immelt had just taken over from Jack, and GE Capital was at that point doing very well. So somebody poached you, somebody called you up and say, forget GE Capital, you should work for an Indian company?

14:07So a mentor of mine from Bain, in fact, reached out and introduced me to Anand Mahindra. And I had a great meeting with him. And in fact, continued meeting him for a couple of years, almost every month we would meet. And Anand wanted me to come and join the Mahindra group. And I'm very glad I did that. What year was that that you joined the group? 2014. You joined in 2014. What was your initial job there? I was head of group strategy, and it was a job that I held for five years before being appointed in this role. So you became the CEO in 2021? That's correct. And this is the first time that the Mahindra group had ever had a non-Mahindra family member run the company.

14:49That's right. So then you joined the company. Do you ever think that would ever happen? When I joined, I joined with the objective of making a significant difference. The Mahindra group was the most respected group in India and one where there was a level of empowerment for all its leaders. That is what Anand Mahindra had set up at that point. And while there was a view that, look, there is a possibility of a group CEO role, it wasn't known at that point in time. And that evolved as I went on there. So there's a story that I read about which said that when you were working your way up to become the CEO, but no guarantees you were going to be the CEO.

15:27You disagreed with Mr. Mahindra on a matter, and you took it to the board, and you explained to the board why he was wrong, and you were right, and the board sided with you. Didn't you think that was going to be the end of your career when you did that? So what happened actually was I was sitting with Mr. Mahindra, and one of my colleagues came in to show what was being presented to the board the next day. And Mr. Mahindra, in his usual manner said, Anish, what do you think? So I looked at that and I said, I wouldn't do this for these reasons. And that is the level of empowerment and openness that Mr.

16:01Mahindra had fostered in the group, where he said that I'm going to call you to the board meeting tomorrow, and I'm going to ask you the same question as I asked you today, and please give them the same answer that you gave me today. And that then transpired into the response. You didn't think he was setting you up for a failure or something by having the board vote you down or something or not? No, I knew him very well by then because I had met him, as I said, every month for a couple of years before I came to the group. And to me, that was one of the biggest attractors for me because it was a group where it was truly very open.

16:33It was say what you want to say, as long as it's good for the company. And that company first aspect was very much a factor there. Okay. So you overcame that, or maybe that wasn't a problem to overcome. And in 2021, you became the head of the company, the group CEO. Is Mr. Mahindra still around? He is, and I reach out to him on a very regular basis for guidance. Does he tell you you're not doing this right or you're not doing that right? We have a great relationship where he empowers as much as he can, and I pull on his guidance as much as I can, so that works extremely well. Does the Mahindra family still own a large part of the company?

17:10Yes, they still own what they have over time, which is close to about 20%. How many total employees do you have in the entire Mahindra group? 320 ,000. That's a lot of people to be taken care of. That is a lot of people. And how many in the United States? Close to 10 ,000. Other than India, where do you have your most employees outside of India? Is it the United States or some other? It is the United States. What's the biggest problem you have now as the CEO of a company? Navigating all the challenges that the world is throwing up because that keeps happening on a regular basis. In your own case, what do you do on the outside when you're not running Mahindra?

17:44Do you have any time for hobbies, philanthropy, sports? What do you do? Are you a big cricket player or cricket watcher? Sports, spending time with family, reading, and doing a lot on the purpose front. And I'll start with that because Mahindra is really a purpose-led company. So we are purpose-led and performance-driven, as we call it. But we start with purpose. We have focused on education for young girls in India. and we've educated close to a million girls in India so far. We've set a target to do a million a year. We are at this point about one-fourth the target, but in the next two or three years, we should be able to get to our target.

18:23We're also focusing on empowering women to find jobs and making them financially independent. And there again, our target is a million a year. The Gates Foundation is partnering with us on this. And we are again at this point about one-fourth the target, but we'll get there soon. And these are some of the activities that really make a difference to India overall. What is the biggest selling automobile in India today? We've got a number of smaller vehicles that are selling more, but we are now the second largest automaker in India, despite the fact that we make only SUVs. Why only SUVs? Because that has been our strength.

18:59And the philosophy we have is do less, but do it really well. All right. So what's the best selling car, the biggest selling car now in India? They're the smaller cars. For us, we have the Scorpio, which is the largest selling vehicle. It's been around for 25 years, almost 25 years now. How much does it cost to buy your best-selling car? The Scorpio, which is our best-selling car, will retail at about$15 ,000 to$20 ,000. How many do you sell a year? We sell close to about$17 ,000 or$18 ,000 every month. So that translates to about$200 ,000 every year. What about electric vehicles? Is these electrical ones you're talking about or these are non-electric?

19:40These are non-electrical. We've got some very good EVs which were just launched last year. Today they account for about 8 % of our total sales, but they should be about 30 % in the next two to three years. And what's the biggest electric vehicle? The biggest EV today is the Tata Nexon. We have roughly a 30 % share of all EVs in India today, and we should be the number one player with 40 to 50 % share there. So if somebody is watching and you wanted to say to them, here's what you need to know in one paragraph about Mahindra and in one paragraph what you need to know about India. Mahindra is a purpose-led, performance-driven company.

20:20Our purpose is a rice philosophy, which is to drive positive change in lives of our communities to enable them to rise. From a performance standpoint, we are the best performing stock in the Nifty 50 since 2002. So even though our market cap has grown 12x in the last five years, it's been a long journey where we've been at the top of performance in India. We operate in 20 industries across 70 % of India's GDP. And we're building a global company and hopefully one that will be a very large company in the US as well. India is poised to be at a very rapid growth over the next 20 years. We expect that growth to be 8 to 10 percent.

21:03The foundation for that growth has been built. It's a consumption-driven economy and therefore despite some of the challenges in the world we feel that India will grow at that pace. India will be the third largest economy by 2030. It's a capitalist economy driven by rule of law with a government today that is very focused on ease of business, on ensuring that companies can succeed in India, and therefore is a very good destination for companies. Why should somebody as a tourist want to go to India? What's the best thing to see in India? Why should somebody go for a week to India as a tourist? India has some amazing destinations, and India is now opening up tourism in various forms.

21:43There are multiple things to see in different parts of the country, from the Taj Mahal and Agra to the deserts of Rajasthan, to the greenery in Kerala, you've got a large number of things in India that are worth looking at. Now, amazingly, when you go back in history, it appears that Britain ruled India with only 20 ,000 soldiers in the entire country. India had a population maybe then of a billion people. How did India allow Britain, this small country way in the North Sea, to control India for so long? How did that happen? India has always been a country that has stood for peace. And therefore, even the resistance to the British was with nonviolence.

22:24And that is what Mahatma Gandhi led. So that has been one of the hallmarks of India over centuries. And so how old are you now? 55. 55. Is there a retirement age that people have normally in India, or you can go for as long as you want to go? We have a 65 retirement age. So you're going to do this, presumably, for another 10 years? At this point, I love it, and hopefully I will continue loving it for the next 10 years. And do you have the responsibility of grooming your successor as well, or is there a Mahindra that might come back? That is unknown. Most likely it will be someone from the team of professional successor, and there will be various folks that I will groom over the next 10 years and present options to the board for the board to decide at that point.

23:09Many companies that succeed have a founder who might have a certain philosophy, and a certain set of principles. Did the Mahindra family, when it started, have certain principles that they imbued in Mahindra and you still live with those principles if it was the case that they had those principles? So when we say purpose-led, a DNA actually comes from our founders. When they founded the company in 1945, they placed an advertisement in the Times of India that talked about the principles under which the company was born. They talked about dignity of labor, about neither caste nor creed nor color shall come in the way of a meritocracy, about opposing antisocial trends.

23:53Today, it would read like an ESG manifesto, but that was what they truly believed, that the company has to do well for society, for communities, and therefore we say we are purpose-led because that is our DNA. Thanks for listening. To hear more of my interviews, you can subscribe and download my podcast on Spotify, Apple, or wherever you listen.