On the future of family businesses
By Ananth Koovappady | 20 Nov 1999
He entered the company in 1991 at a time when the company was perceived not as a family run company but as a professionally run organisation. Keshub Mahindra – Anand's uncle and the group's patriarch – had taken a back seat from day-to-day operations many years earlier, and the company was being run, under his benevolent supervision, by a well-knit team of highly qualified professionals. The world looked at Anand's entry as "one more family trying to strengthen its grip on a cash cow". But the years that followed proved the skeptics totally wrong.
The changes brought about by Anand Mahindra have borne fruit in the capital markets, where the M&M share is a darling of long term investors. Unlike many other family-run organisations, M&M's financial disclosure policy has won it accolades from analysts.
As he leads the group into the new millenium with many ambitious plans, he took time off to speak, for over two hours, with Kiron Kasbekar and K.A.Anantharam of domain-B at his well appointed 'war room' at Mahindra Towers in Mumbai.
For 'Mahindra & Mahindra in figures', click here
On the future of family businesses
Family businesses have a particular destiny in this country that will have to be played out at different paces by different groups. But essentially, the direction will be the same. The new paradigm which family businesses must imbibe in the coming century is that wealth generation doesn't come from control. The nexus between control and wealth generation is being broken. In fact, too tight a control could lead to erosion of wealth.
At some point in the past the nexus between control and wealth was a reality in this country. However, with the economy opening up, with the expansion of the capital markets and with other sources of funds being available to businesses, this nexus is increasingly becoming irrelevant. True separation of management and ownership can happen only when this nexus is broken – and this, in turn, will generate wealth for the families.
On the family's involvement in the group
In 1994, Keshub (Mahindra, who had already distanced himself from the day to day operations of the company) and I decided to 'kick ourselves up'. We decided to play the role of direction setters and brought about a drastic reorganisation within the company. Before 1994, M&M was a very 'functional' company where, for instance, a marketing person could be selling jeeps in the morning and tractors in the evening. It was decided that in order to bring about a focus it was imperative to recast the company in the SBU (strategic business unit) mode.
