Thinking global is part of the Mahindra Group identity.

From its founding in 1945, it has been connected internationally by business partnerships, a multinational workforce, and the boundless ambition to integrate itself with global communities and bring opportunity to customers across the world. The group is in a position to take advantage of global opportunities. On the other hand, it also faces global exposure risk.

Opportunity in Turmoil

The world is in turmoil. USA has been witness to a prolonged economic crisis. The financial crisis that Portugal, Ireland, Italy, Greece and Spain are going through threatens Europe. Australia and parts of Asia are affected too. This turmoil creates churn which in turn gives rise to tremendous opportunities.

India is fairly isolated from this turmoil which allows it to take advantage of these opportunities. What could be the possible areas of opportunity for the Mahindra Group in this situation? How can it leverage these opportunities? What strategy should it formulate to take advantage of these opportunities? What critical competencies does it require? What internal competencies can M&M leverage to enter into these areas? What is the roadmap for building competencies that dont exist?

Capital Investment Process

The Mahindra Group takes a sectoral approach to opportunity assessment. The three sectors are Auto Farm Sector, IT Sector and the Systech Sector. What should be the model for assessment of opportunities in a federated environment like the Mahindra Group, balancing growth, profitability and ROIC while reviewing investments of various projects with differing risk-return-growth options?

How should the Group make the choices and the trade-offs? How does the capital planning process framework balance capital allocation for various growth, sustenance and improvement projects to maximize shareholder and stakeholder value? How do we define the role of the project appraisal team and the business unit teams to address the neutral approach of appraisal to the emotionally attached, highly optimistic reasoning of the project team?

How can the Group continue to stress test the project assumptions during its implementation phase with various levels of capex committed? How can the Group continuously screen or escalate and take steps to mitigate the risk attached with the investment projects?

Minimizing Exposure Risk

Given the current economic crisis, the new normal is marked by high volatility in the financial and commodity markets, reducing certainty of investment and returns. How does one manage risk in this global environment?

The Mahindra Group has a strong glocal footprint in addition to having global pieces which are either strongly global or have exposure to European and US currencies and some emerging markets. What are the opportunities and what are the security mechanisms that the Group needs to build?

The extent of exposure differs from sector to sector, complicating the issue further. Eg., 95% of IT revenues would be from external markets whereas it is managed by people who may be 50% outside and the other 50% in India making the costs Indian and the revenue a combination; About 50% of Automotive exposure is domestic where as another 50% is of South Korea due to the Ssangyong acquisition, leading to multi-domestic exposure in addition to global export exposure; Tractors has domestic exposure, China exposure where Mahindra has acquired two companies and US-Australia exposure. Arrive at the strategy with suggestions on how to manage the risk this involves.

Further, the complexity of financial markets makes risk management an extremely complex and difficult aspect of financial management. Also, the demands of multiple regulators with ever increasing compliance requirements stretch the bandwidth of companies.

Given these differing rates of exposure, provide innovative methods for the evaluation of investments. Also, protecting and creating value by taking advantage of markets within robust risk boundaries.

How can the Mahindra Group employ common systems, policies and practices without weakening local management empowerment? At the same time, how can it drive and release synergies in financial management, banking relationships and bring value to the group?

Investor relations has become a key function, involving meeting investors and moderating expectations, conveying the story and philosophy of the Group. Also, in the longer term, it needs to find long term investors to reduce share price volatility. Hence, the role of the finance function is undergoing a dynamic change, becoming a predictor of markets, scenario planners and a fast fit operator with the lowest response time. Given this scenario, provide a plan for developing and nurturing talent to meet these requirements.