2020 has just drawn to a close. It’s been a year we will never forget. Life, as we knew it, turned upside down. Words are inadequate to convey the magnitude of the disruption it caused in our lives. It was almost like the Manthan, the great churning in our Indian mythology. I have used this mythological metaphor quite often in the past, but never have I found a more appropriate situation to apply it to than to the year gone by.
The Manthan is supposed to have caused enormous turbulence, as the Gods and demons churned the cosmic ocean. Lord Shiva had to personally swallow the poison that was thrown up at first. And yet, as a result of that churning, some wonderful things emerged from the waters — Lakshmi, the goddess of wealth, Chandra, the moon, and Amrut, the divine nectar, to name just a few.
And similarly, at the end of a turbulent year when the pandemic churned our entire planet, my predominant feeling today is one of — gratitude. Yes; gratitude, for the many good things that have emerged. And I want to dwell for a while on the practice of gratitude and recognising our gifts and our blessings.
I have a good friend whose counsel I greatly respect gave me some advice which I have followed diligently for the past few years. He told me that Anand every morning, before starting my work, I should spend a few minutes recalling and listing out all the things that happened during the previous day for which I ought to be grateful. He said you will be surprised by how long that list will turn out to be! He was right. Try it yourselves. I know your experience will be no different from mine.
So I attempted to make a brief list of what we at the Mahindra Group should be grateful for, as this strange and sinister year crept to a close. And I wasn’t surprised to find that, in spite of all the problems, some unexpectedly great things had emerged from what seemed like an impossibly bad situation.
Let’s start with the valuable learnings that have emerged from this global crisis: We have learned to value our health. We have learned to cherish our families and our friends. We have learned no man is an island, and that our welfare lies in taking care of the welfare of others. We have learned that as a business, we can effectively take on any problem that life hurls at us. We have learned that the human race can invent and innovate at super speed when the situation calls for it. I don’t think we have ever created vaccines so fast in the whole of human history. Our Covid warriors similarly rose to the occasion and innovated at a speed we have never seen before. That is something to be truly grateful for.
The beauty of this exercise of gratitude is that when you make a list of things to be grateful for, something or the other from that list will catalyse new thoughts, new ideas and new solutions. What jumped out of the list that I made and knocked loudly at the door of my mind was the speed of vaccine development. I want to talk about that subject for a while because I believe there are enormous lessons for our Group from this story about how the new vaccines were created at an unprecedented speed.
I think the first important learning from that story is that the day of the purpose driven business has arrived. Manufacturing the vaccine is, in fact, a true purpose driven business. And it makes me proud that while this idea is gaining currency today, we at the Mahindra Group have been running purpose driven businesses since 1997, when we first articulated our core purpose. We recognised quite a while ago that people who come to work every day knowing they are serving a higher purpose can indeed achieve the impossible.
The second, and even more important lesson, is the power of a quick reboot. Just think how quickly medical science abandoned its conventional approach and rebooted to tackle this new problem. Until this year, do you know the average time it took to develop a vaccine – 10 years. Yes 10 years. And yet, thanks to this crisis, we have today developed not one but three effective vaccines, within 10 months!
Why? Because all over the world, dedicated researchers and regulators did a quick reboot — they restructured their processes, applied the latest technology, cut out the unnecessary loops and hoops that researchers used to jump through, and just went full steam ahead to develop a vaccine.
We in the Mahindra Group are familiar with the concept of rebooting. It’s become part of our internal vocabulary ever since the 2008 Blue-Chip conference where, when faced with a global recession we decided we had to focus on 3 Rs — Reboot, Reinvent and Reignite. We did it then, and we have done it now!
At the end of nine months of the pandemic, we are stronger as a business than we were before the crisis. I can’t think of a more inspiring example of rebooting. And how did we do it? The same way as the vaccine. By re-evaluating our approach; by using technology and reinventing processes; by cutting out the unnecessary and the irrelevant; by using our capital more efficiently; above all, by moving with speed and agility.
And the results have been remarkable. Let me just give you just a sampling of the good news. We achieved our highest ever PBIT in the Farm business in Q2 this fiscal year. In the same period, the operating margins of both our farm and auto businesses were the best in their respective industries. The huge demand and excitement for Thar has reinforced our SUV positioning. At Tech Mahindra, the pipeline is the highest-ever over the last 2 quarters. At MMFSL, consolidated AUM grew by 12% year-on-year in September along with a 111% increase in PAT. At Club Mahindra, occupancies have been moving up steadily from 30% in Q2 to 74% in November. And all of this is in the background of the actions being taken on capital allocation that have established a clear path to 18% ROE as I mentioned during the M&M AGM a few months ago.
From 2002 to 2018 our stock price showed a compound average growth of 35% — the highest out of all the stocks in the NSE. However, in 2018, the markets did begin to question some of our strategies and the stock price fell precipitously.
So what did we do? We showed humility and listened. We rebooted. Just as we did in 2002, we once again sent out a message that we would never lose our focus on financial performance even as we Rise for Good. We signalled that capital allocation would become far more efficient. And the stock price recovered with the same speed that it had fallen.
That is Mahindra. We have always had our ups and we have had our downs – that’s the circle of life. The important thing is that we have always succeeded in turning every down into an up; every obstacle into a springboard to newer heights. I have no doubt that we will succeed because everything in our history tells me that the Mahindra DNA contains built in antibodies to a crisis. We started business at a time of unprecedented crisis, under the shadow of partition. Yet we built a business that has lasted 75 years.
Which is why I am ending my message with enormous confidence that we stand on the verge of a new cycle of growth. This year, when we round off our 75th anniversary celebrations on October 2nd, we will look back and our jaws will drop when we reflect on how far we have come from those first few months of paralysis from the pandemic; we will marvel at what a leap we took; what a reservoir of resilience we drew upon. With this DNA that is hard wired into us, I know that the troubles of 2020 will be relegated to the past. This ‘strange & sinister year’ will be transformed into a year of reinvention and regeneration as we embark upon the third decade of the 21st century and confidently set our course for our centenary. Let me close by leaving you with an image that I hope will capture what I believe we will achieve in this New Year.
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