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MAHINDRA GROUP: RESTRUCTURING
The prologue of succession!
If you ever wondered who could be Anand Mahindra’s successor

When a much younger Anand Mahindra entered the gates of Mahindra Group in 1991 for the first time, industry watchers labelled his arrival as ‘one more business family trying to (desperately?) retain its grip on a cash cow’. But in the years that followed, this Harvard alumnus has battled the critics continually, and successfully to some extent. He started his career from Mahindra Ugine Steel Company Ltd as an Executive Assistant to the Finance Director in 1981. In a period of 10 years, with his management approach tested and market understanding bettered, the group became confident of making him the Managing Director (and Vice Chairman in 1997). In the meanwhile, the group has expanded to new sectors like IT, hospitality and financial services; and has also managed to become a $6.7-billion conglomerate – apart from dabbling in the acquisition of the scandalised and troubled Satyam Computer Services (for $625 million) or the IPO of Mahindra Holidays & Resorts or the Renault venture.

But for a while in the past, and more now, the question has always lingered around – who is ‘Tier 2’ leadership in the group? Ask yourself, when was the last time you recalled the name of a Mahindra group business head? Compare that with the positioning, say, Ratan Tata has given in the past to people like Ramadorai (TCS), Ravi Kant (Tata Motors), or Muthuraman (Tata Steel). Critics have also pointed out at times that Anand Mahindra has taken quite a while to balance the old and the new leadership.

“But that change, is finally happening,” tells us K. Sudarshan, Managing Partner, EMA Partners India. Perhaps Anand Mahindra foresaw the perception quotient. And in that context, the recently announced rejig, named as the ‘clean sheet redesign’ by Anand Mahindra, comes quite handy for him to counter the quotient. Under this ‘redesign’, 15 new faces will be added to the top management body. In an official release, the company elucidates, “The Group Management Board will be replaced by the Group Executive Board with effect from April 1, 2010. It is expected that with the wider participation in this Board, the group will set in motion a process that is more suited to creating alignment and exploiting synergies at both strategic and operational levels...”

Under the executive board, 15 new members will accompany the eight members of the earlier management board; taking the total to the 23 members. In all, the new board is expected to have a bunch of 40-something senior managers who have been groomed since 2004 to take over top jobs across the group’s verticals. Unlike the earlier management board, in the new executive board, membership is not restricted to Presidents but also includes representatives of the group’s next generation of leadership. Sign of good times to come? Not so fast, says Vaishali Jajoo, auto analyst, Angel Broking, who also mentions to us that the recent management changes, though packaged anew, are nothing different from past exercises where when members are expected to retire, new executives are announced. It is true that the newly announced structure overlaps with the retirement of two top vertical heads of the group – Arun Nanda, who heads infrastructure and Anjanikumar Choudhari, who heads the tractor business. But is that enough to discredit a well publicised and seemingly creditable change?

Not quite so, we believe. Company officials defend Anand Mahindra, commenting that he has been spending a considerable amount of time in succession planning since 2004. Moreover, unlike the Tata Group, where recent changes in top positions for verticals like auto, steel and IT have enabled outgoing CEOs to continue working in a non-executive capacity, M&M is now sticking to its 65-year cut off for executive directors and 60-year cut-off for those lower in the ranks. Add to that the fact that the realignment does give an indication of the businesses that are likely to be the future growth drivers, such as retail, infrastructure and hospitality; apart from automobiles, IT and tractors. The group is also planning to divide the core automotive and farm equipment business into three profit centres and two integrated key processes. The infrastructure vertical is also expected to be divided into two core sectors – hospitality & real estate; and they’ll be run by separate heads...

          

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