Over the last 5 years, the Mahindra Group’s performance has been underpinned by 3 distinct phases of evolution: 1. Disciplined Capital Allocation Spurred by uneven performance, in FY21, we adopted an objective approach to evaluate our businesses. Under this approach, our businesses were looked at from two lenses. Businesses that had a clear “right to win” and businesses that had clear plans to translate that “right to win” into long term value creation based on return on equity. Based on this evaluation, the group refocused on 3 sets of businesses. The first set are the market leaders - our Auto and Farm businesses. These businesses have significant aspirations, are already operating well at scale today and have established a clear right to win. The second set of businesses are those which have scale but are not operating at the level they should be operating at. The third set of businesses, called the Growth Gems, are lacking scale but have tremendous growth potential. Through this process, the Group also exited several businesses where it could not see itself creating compelling value for shareholders. 2. Pivot to Growth This phase (FY22-FY24) was marked by laying out a clear strategic roadmap across the 3 sets of businesses. • Capitalize on market leadership: Our Auto and Farm businesses are leaders in the space they are operating in. Auto is the revenue market share leader in SUVs while Farm is the leader in Tractors in India. These businesses aim to strengthen and expand their leadership by building customer-centric brands that are driven by industry-leading technology and a bold global vision. We realised that Product innovation will be key for these businesses which is why, the Auto and Farm businesses delivered some of their strongest product launches like the XUV 700, Thar, Scorpio N and Oja range of tractors during this phase. • Achieve Full Potential: The next set of businesses are Mahindra Finance and Tech Mahindra. These two businesses are large scale businesses where due to a variety of reasons, their operating performance has been below those of peers. The focus in these businesses is to improve their operating performance so as they scale, it results in significant value creation for shareholders. At Mahindra Finance this has translated into a focus on asset quality even as the business looks to have a more diversified portfolio to deliver consistent business performance across cycles. At Tech Mahindra, the focus is on improving service delivery while improving the service mix across new age service offerings and geographies. • Growth Gems: These third set of businesses will propel the Group’s growth for decades to come. These are businesses like Last Mile Mobility where Mahindra is already the market leader in Electric 3 wheelers. Another example is our Lifespaces business, which has aspirations to grow to Rs. 10K crores of residential pre sales by FY30 which will be 5 times the pre sales in FY23. There are 10 such identified businesses. Each of the Growth Gems is focused on a segment of the Indian economy which is expected to deliver outsized growth over the next decade. Due to the opportunity in these segments, the businesses have taken on a challenge to achieve 5X their FY23 scale by FY30. 3. Deliver Scale Fast forward to FY25, this three-pronged approach to our businesses has resulted in significant growth in topline and profits. In FY25, we achieved 14% revenue growth and more than 14% growth in EPS. We also delivered an ROE of 18%. The EPS for FY25 represents a 63% CAGR since FY21 when the group embarked on its strategic pivot. During the year, the Group also further refined how it looks at the Growth Gems. The Growth Gems are now distinguished as ‘Scalable Growth Gems’ which have the potential to deliver $2-$3 Billion of valuation by FY30 while another set of Gems are classified as ‘Emerging Growth Gems’ which have the potential to achieve $1 Billion of valuation by FY30. This refinement in classification allows the Group to prioritise capital allocation according to the potential. As and when an Emerging Growth Gem lays out a clear roadmap to $2 Billion or more of value, it would move up to Scalable. Integrated Annual Report 2024-25 | 18
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