COVER STORY Q&A

invested with the valua- we have a much lower
tion based on these plans.
If some of our growth gems
can grow 5x, why can’t all
the others?
fff
You plan to list some of
your growth gems. How
is that progressing?
That is still on track... In
Susten, for example, we
are listing the InvIT (infra-
structure investment
trust), because that is
where most of the capital
is going to be. Therefore,
DECODING M&M’S PORTFOLIO
for value creation if we can
price to book than others,
and [it] is sort of under-
valued, in that sense; this
is a very good franchise
that we can grow. Beyond
that, I would just look
at all our growth gems.
Which business gets
there faster will depend
on execution... Our real
estate business has the
ability to do joint devel-
opment with many part-
ners—and we’ll be able
to deliver great products
there. We have delivered
that creates a lot of trust
achieve 5x growth in our
growth gems.
fff
Can we call it your de-
risking strategy because
of how you’ve invested
in different sectors and
identified your growth
gems?
Our foray into the ser-
vices businesses was never
thought of as de-risking,
but it was part of the
DNA to say, ‘here is where
opportunities lie, and this
with shareholders, which
we haven’t fully lever-
aged in many cases. And
the second thing we have
is synergies within our
businesses. Many of our
services businesses have
grown from our key busi-
nesses. Mahindra Finance
is a classic example; the
logistics business is anoth-
er example. That synergy
is getting even stronger
now as we bring the group
together to do a lot of
things. We made collabo-
ration a minimum require-
ment for any leader and
that has reaped significant
dividends.

CORE
64 |
W Mahindra Tractors
W Mahindra Auto
(including SUVs
and LCVs)
W Mahindra Finance
W Tech Mahindra
Susten will be the first to
move to value creation.
And we will continue to
look at similar opportuni-
ties for other growth gems.
That is what will unlock
shareholder value. And
the other way is by bring-
ing [new] investors in. It’s
a combination of both of
those things.
We see tremendous
potential across many of
our businesses right now.
In the short term, I see the
maximum potential in
Mahindra Finance because
fff
GROWTH GEMS With the group as diver-
sified as it is today, how
W Mahindra W Mahindra Last
Lifespaces Mile Mobility much of a challenge is
capital allocation?
W Club Mahindra W Classic Legends (including What we found is if we
brands like Jawa and Yezdi) deliver results, there is no
W Car & Bike
W Mahindra Logistics dearth of capital. We’ve
W Mahindra raised capital without any
Accelo W Susten by Mahindra formal fundraising. We did
not appoint investment
bankers... we didn’t say that
we wanted to raise funds.
Our approach has been that
India’s first net zero resi- is what we’re going to do as we need marquee partners;
dential community—and a result.’ As we think of 5x and we get to bring them in
that got sold out in three growth for many of them only if they add value and
days. We deliver India’s going forward and sig- there’s a long-term part-
best holidays but only for nificant growth for Tech nership with it.
a Club Mahindra mem- Mahindra and Mahindra Therefore, we don’t
ber; can we do it for a Finance—that will con- need funds—we have a
much wider population tinue to create enormous very large amount of cash
and on a consistent basis? value—we think of it on the balance sheet right
In logistics, we have got more as a value creation now. So, none of these
a very good business, but approach in areas that investments were made
it can be five or 10 times we’re good in. because we needed funds,
in size. We will obviously What does Mahindra it was because we felt they
continue to put forth have that someone else in could add value and grow
strong execution across hospitality or logistics or our businesses. And in
each of them. There’s a real estate may not have? some cases, external vali-
$17-billion opportunity One is, we have a brand dation is important. We’ve

Business Today 6 August 2023


THE GROUP’S VISION IS TO CONTINUE
LIVING OUR PURPOSE; BE THE LEADER
IN EVERY INDUSTRY WE ARE PRESENT
IN; AND CREATE VALUE FOR OUR
SHAREHOLDERS
been very selective about
who we bring in. As long
as we continue delivering
on what we committed
to, we will have investors
willing to invest in us. If
we focus on that, there’s
no dearth of capital. The
minute we stop deliver-
ing, everybody will start
asking questions.
So our approach is
very clear: make bold
commitments, but make
commitments that you
can deliver on. Do less,
but do it well.
fff
Can you give us an ex-
ample of doing less but
doing it well?
Let’s start with the auto
business. We focussed on
our core, that is authen-
tic SUVs, with the aim
of being the No. 1 SUV
player. The result? Our
SUV market share grew
from 13.6 per cent in
FY21 to 19.1 per cent in
FY23. That 19.1 per cent
should go much higher.
As you think about Born
Electric SUVs, we will be
No.1 in that space by far.
So that’s one example of
focus.
Second, let us look at
the overseas markets.
Business Today 6 August 2023
If we have made it big in
India, [then] we have the
ability to be successful in
international markets as
well. We’re going to start
with phase I, where we are
looking at three markets:
Australia, South Africa
and Chile. Can we get to a
high market share in these
three markets? And then
once we do that, we’ll look
at phase II beyond them.
So pick specific things but
do them in a big way.
fff
Does it help that you
have a consulting back-
ground that allows you
to see the bigger picture?
That has definitely helped.
The ability to see the big-
ger picture helps but as a
leader it’s also the ability
to know when to get into
details and when to step
back and let others go into
them. The ability to trust
leaders, drive account-
ability, take hard decisions
and stay firm on them, in
the interest of business, is
important. Setting a high
bar for delivery and being
able to maintain it has
helped a lot.
fff
Your global strategy has
been measured. How
does one pick up on slots
in a global market?
For a global strategy or
[global] acquisitions, the
most important thing is | 65
understanding the objec-
tive: Why are we doing
this? And then equally
important, is the ability to
deliver what we have said
we will do... And often, if I
were to look at the history
of companies over time,
there were some things
done because they sound-
ed very exciting or very
appealing. The discipline
comes in asking, ‘Is it core
to our strategy? Is it some-
thing that’s going to help
us? And is this something
we’re going to deliver
on?’ One term that we use
with the board is that we
have earned the right to
dream big. So, have the
discipline that even as you
dream big, deliver on what
you have been dreaming
about.
@PLidhoo
HEAVY RIDER
Pawan Munjal, Executive
Chairman, Hero MotoCorp
HERO-HARLEY, BAJAJ-TRIUMPH AND
HONDA, AMONG OTHERS, ARE GEARING
UP FOR A BRUISING BATTLE WITH PREMIUM
MOTORCYCLES GIANT ROYAL ENFIELD. NO
MATTER THE OUTCOME, THERE WILL ONLY
BE ONE WINNER, THE CUSTOMER

BY PRERNA LIDHOO
PHOTO BY PURUSHOTTAM DIWAKAR
 AUTO PREMIUM BIKES
IVE MUSIC. THROBBING strobe lights. A
room full of people of all ages, shapes,
and sizes in Harley-Davidson gear. Ev-
erybody grooving to the music being belt-
ed out by a live band. And enjoying their
drinks. You’d be excused if you mistook it
for a bikers’ meet or a private concert.
But it was neither of those things. In-
stead, it was the launch of a new Harley-
Davidson bike in India, which marks the
coming together of India’s largest two-
wheeler maker Hero MotoCorp and the
iconic American bike brand. On display was a glimpse
of the rugged bikers’ lifestyle that Harley-Davidson is
known for, and hopes to market in India as well.
But the lifestyle that Harley-Hero seem to be count-
ing on is not new. Starting with the first imports of Royal
Enfield motorcycles in the 1950s for the Indian Army,
the love Indian bike enthusiasts have for heavy bikes—
that fall in the premium category—has only grown with
68 | OF THE 18 PER CENT PREMIUM BIKES—THAT OFFER
HIGHER MARGINS PER BIKE—SOLD IN INDIA IN FY23,
CLOSE TO 40 PER CENT WERE ROYAL ENFIELD BIKES
time. And that love has birthed a new race in the bustling
roads and highways of India, a race to upgrade to premi-
um, heavy bikes. Consequently, two-wheeler makers are
revving up to impress today’s discerning riders with new
offerings. But first, a little background.
India’s two-wheeler market is largely dominated by
entry-level (76-100cc) bikes at 51 per cent market share
in FY23, and commuter (110-150cc) bikes at 30 per cent.
The premium segment—that comprises bikes above
150cc—accounted for 18 per cent in the same period. But
five years ago, premium bike sales accounted for just 14
per cent, while entry and commuter bikes accounted for
59 and 26 per cent, respectively. Further, of the 18 per
cent premium bikes sold in India in FY23, close to 40 per
cent were Royal Enfield bikes.
And this is what is enticing global motorcycle makers
to enter the fast-growing premium bikes segment in In-
dia—in partnership with Indian companies—and chal-
lenge the dominance of Royal Enfield. And that is why
there were two big-ticket launches in just one week in July.
Hero launched the Harley-Davidson X440, while Bajaj un-
veiled the Speed 400 and Scrambler 400 X—developed in
collaboration with the UK-based Triumph Motorcycles.
Business Today 6 August 2023
“This move will elevate the premium imagery for the
Hero MotoCorp brand and help expand the mid-size mo-
torcycle segment... Harley is the most established brand
and player in premium motorcycles. It is the first time
Harley is coming into this segment, with 440cc, in India,”
said Pawan Munjal, Executive Chairman of Hero Moto-
Corp at the launch event held on July 4 at the company’s
Centre of Innovation and Technology in Jaipur. “There
are thousands of customers out there who would want to
buy a Harley-Davidson, but it was so far out of their reach.”
Munjal is not off the mark. While heavy, premium
bikes have always had a fan following in India, they had
largely become confined to a few outdated models from
Royal Enfield till the 2000s. And Harley and Triumph
bikes were too expensive to attract a mass following. All
that changed when Royal Enfield started updating its
portfolio with new launches at attractive price points. It
also made lifestyle the USP of Royal Enfield bikes.
Playing on this strategy has worked for the compa-
ny. Today it is the largest premium bikes maker in the
country. And that’s the reason Indian mass-market two-
wheeler makers are forging partnerships with global
motorcycle players to enter the premium segment. “It’s
a high-margin product. The volumes in the 350cc-plus
segments are not very significant. Entry level motor-
cycles are more or less 50 per cent of total motorcycle
sales. And commuter is another 25-26 per cent. So only
the remaining 20 per cent is the premium strata,” says
Aditya Welekar, Senior Research Analyst at Axis Securi-
ties. Royal Enfield declined to participate in this story.
THE RIDE AHEAD
Premium bikes offer higher margins per bike. But will
brand value and an aspirational lifestyle be enough to
help Indian players grab a slice of the pie? It’s not just
these two aspects the players are relying on. The strat-
egy is multi-pronged. For instance, when the Harley-
Hero partnership was announced, Hero had said that
it will also develop a bike under its own banner loosely
based on the same platform. At the launch event, Mun-
jal said the bike will be unveiled in Q4FY24. “Both Hero
and Harley products will be different in character, fea-
tures, sound, performance and body type, and will cater