"When we hear 'mergers and acquisitions', we tend to think only of numbers or the hard aspects of a deal but the fact is that softer aspects of people and cultural sensitivities are just as important," says V.S. Parthasarathy or Partha as he is fondly known, Group CFO, Group CIO & President - Group Finance and M&A at Mahindra. The M&A veteran with 100 deals to his credit measures success not only in financial terms but also in terms of how smoothly integration takes place.

A case in point is Mahindra’s acquisition of a 43.3% stake in Punjab Tractors Ltd. (PTL) a decade ago. “As one of India’s most successful Public Sector Enterprises, PTL was very proud of its heritage and there were some teething issues when we acquired it which was but natural. However, we worked hard to assure the hard working employees of PTL that we were partners for long term sustainable growth, building on their heritage and were not winners looking to put their rich legacy at risk. In fact, as a telling gesture of assurance, Keshub Mahindra, our Chairman at the time & Anand Mahindra who was then Vice Chairman and Managing Director, both visited the company in Punjab and interacted with employees. They won their hearts with the promise that this transaction will enhance and not diminish the Swaraj brand. From then on, the integration with the Mahindra family was a smooth affair and the employees found a sense of belonging to the Group and began to take pride in its achievements." reminisces Partha.

Today, PTL is one of the Mahindra Group’s biggest success stories, with the company creating substantial value for Mahindra’s farm equipment business with spectacular returns.


“M&A is a great tool for growth as it gives you immediate access to new geographies, markets, people, diversity of talent, size and heft,” says S. Durgashankar, President - Group M&A, Corporate Accounts, Group Secretarial, Mahindra & Mahindra Ltd. “Of course, you must consider various aspects like potential synergy, amount of effort required to revive the company, etc. but the returns – as we have seen in the case of PTL and Satyam – can be well worth the effort,” says the M&A expert who is credited with setting up the practice within M&M Ltd.

M&A proved to be a potent tool for Mahindra’s Farm Equipment Sector, helping it fulfil its global ambitions. “We have always been the dominant player in the domestic market but a few years ago we felt the need to redefine the space we operate in,” says Rajesh Jejurikar, President – Farm Equipment Sector.

The global market for tractors and other farm equipment is worth more than $150 billion a year. At home, the tractor market is just $6 billion, while that for other farm mechanisation agriculture equipment is even smaller. "Although we were the global leader in terms of tractor sales, we were catering only to the domestic and a few overseas markets. As much as 95% of our division's revenue came from tractor sales in India which was a risk in case the monsoon failed, leading to drought like conditions. Hence, we had to look at ways to derisk our operations. Enhancing our overseas footprint and expanding further into farm mechanisation was the route we chose as the global non-tractor farm equipment space is worth an estimated $ 90 billion," says Rajesh.


The Sector began identifying gaps in its current scope of business and then looked at areas where it needed to acquire expertise to help the business grow. "We zeroed in on three potential areas – the rice value chain, harvesters and tractor implements. So, in 2015 we acquired a 33% stake in Japan based Mitsubishi Agricultural Machinery (MAM), a full range agri-machinery company producing tractors, combine harvesters and rice transplanters. MAM offered the requisite expertise to help us gain a foothold in paddy / rice cultivation," says Rajesh.

In 2016, the company acquired a 35% equity stake in Sampo Rosenlew, a combine harvester company based in Pori, Finland. Sampo provided product and technological capability and optimised the business’ reach in Asia, Africa and Eurasian Economic Union countries. "Our acquisition of a 75.1% equity stake in Hisarlar Makina Sanayi ve Ticaret Anonim Şirketi (Hisarlar) in 2017, a farm equipment company based in Turkey, gave us the third and final piece of our strategy roadmap which was tractor implements. Hirsarlar is the market leader in rotovators with a 45% market share in this space and its acquisition will help us expand our footprint in Turkey and Europe," explains Rajesh as he holds forth on the strengths that each deal brings to the table.

These acquisitions resulted in three global Centres of Excellence (CoE) for product development and supply which will enable the business to globalize and cater to multiple markets.

"Ultimately, all the various parts of our business are interlinked as products will move from one market to another and we will reap synergies in market access, product development and supply. Some of the benefits of global acquisitions have already started showing results in the domestic market where we have introduced tractors for the horticulture segment and rice transplanters from the Mitsubishi portfolio. This will help us drive mechanisation in the Indian market as well," concludes Rajesh who has also set his sights on Brazil and Mexico.

“Ultimately, all the various parts of our business
are interlinked as products will move from one
market to another and we will reap synergies
in market access, product development and supply.”

- Rajesh Jejurikar,
President – Farm Equipment Sector.


M&A also helped Mahindra’s Agribusiness expand the scope of its product portfolio and operations. The agribusiness division was started in 1999 – 2000, with an initial foray in the seed potato business followed by a focus on other areas like grapes, agrichemicals, etc. “We were looking to develop a viable business model and experimented in different areas but it was only in 2010, when agri was hived off into a separate vertical that we decided to revisit our strategy,” says Ashok Sharma, President – Agriculture Sector and MD & CEO - Mahindra Agri Solutions Ltd.

The business soon realised that it did not offer stakeholders a unique value proposition as far as its main business, seed trading, was concerned. “We were growing Indian varieties of seed potato but required stronger R&D and technological capabilities which would differentiate us from the competition. This would also require investments in the supply chain. So, we decided to look for an appropriate partner who would help us develop these competencies,” says Ashok.

In 2014, the Agri division entered a Joint Venture with HZPC, Holland, a global leader in breeding, cultivation and trading of seed potatoes. The JV would offer new and superior varieties of seed potatoes to farmers both within and outside India. "It's a win-win situation for us as we get access to technology, new varieties and best-in-class practices. We have identified six varieties of seed potatoes suitable for the Punjab market which we will also export to Bangladesh, Pakistan, Sri Lanka, Thailand, Myanmar, Africa, Russia and the Middle East. The technical expertise we gained through the JV has also helped us set up a modern Aeroponics facility spread across five acres in Mohali, Punjab where we grow seed potato plants that are suspended in a closed environment, without the use of soil. This facility currently produces 3 million minitubers and the capacity can be expanded to 1 billion," he says.

Aside from gaining a foothold in the Seed Potato business, the sector also aimed to consolidate its position as one of the top three global grape players in the world by 2022, with a transnational sourcing and distribution network. “We started exporting grapes in 2005 and we went from 72 MT to over 8000 MT in eight years.

In 2013 – 14, we began to recalibrate our long-term strategy and we realised that we would have to move away from exporting only from India as it was limiting our reach. We wanted to achieve exports of more than 65,000 MT and realised that the only viable way of accomplishing this was through inorganic growth. We also identified three important markets from a sales point of view, namely Europe, China and the USA. We needed a partner with the requisite reach and expertise,” says Ashok.

This search led them to the Netherlands based OFD Holding BV. The Company operates in Europe, China and South East Asia and is also the fourth largest distributor of grapes in Europe with sourcing locations in South Africa, Peru, Chile, Egypt and India. The business acquired a 60% stake in OFD Holding BV in 2016 and this partnership will lead to significant synergies.

Both companies will gain access to a large sourcing base in India, South America and South Africa as well as a distribution base in Europe and China. The OFD acquisition proved to be a great move from a strategic point of view as it added substantial breadth and depth to Mahindra’s existing grape business at a very reasonable valuation.

After tasting success with grape exports, the business soon set its sights on other fruit varieties as well. In 2014, it signed a JV with Belgium based fresh produce company, Greenyard (formerly UNIVEG). Mahindra Greenyard Pvt. Ltd., as the JV is known, focuses on developing a fresh fruit supply chain to provide high quality fruits (other than grapes) that will meet the needs of both the domestic and international markets.

“The JV provides us with technical knowhow and best practices in quality control, post-harvest handling of fresh produce, the ripening process and farm agronomy practices and procedures to meet international quality standards. It will also help farmers improve their productivity and price realisation,” says Ashok.

Greenyard has a network of 32 Distribution Centres in Europe and a global customer base spread across six continents which adds greater depth to operations. Select Indian fruit will be sent to global markets via efficient export oriented supply chains. “We are also developing a high-quality supply chain for export quality bananas. Last year, we cultivated the fruit on over 300 acres of land in Gujarat and Madhya Pradesh, which was retailed under the Saboro brand” explains Ashok.


For Tech Mahindra, which closed about four deals over the last year, there are four parameters it takes into consideration when looking at potential acquisitions. “The first is capability, then geography or market access, new technology and finally, adjacency to what we already offer customers. For instance, if we focus on SAP, then any company that focuses on supply chain or ERP will extend our current capabilities. Moreover, a good acquisition will deliver a combination of relationships, references and capabilities,” says Manoj Bhat, Deputy CFO and Head of M&A, Tech Mahindra.

The IT major was looking to increase its bandwidth in two major verticals, health care and banking services and within these verticals it looked at diversifying and enhancing its capabilities in various ‘horizontals’ like engineering, BPO services and infrastructure management. The company either looks to acquire capabilities that it can sell across multiple customers and geographies or seeks entry in an industry or market space.

In alignment with this strategy, it acquired one of the UK’s leading processing platform companies,Target Group, in May 2016. With a strong client roster including Goldman Sachs, Morgan Stanley and Credit Suisse, Target provides Bpaas (Business Process as a Service) offerings in the areas of lending and investment products servicing to its clients, on variable pricing models.

Target has a strong foothold in the mortgage space and its leading fintech platform enables clients to automate complex critical processing, servicing and administration of loans, as well as investments and insurance and this acquisition has added significant value to our portfolio. The Group’s capabilities are highly complementary to Tech Mahindra’s strong BFSI IT services capabilities and significantly enhance its Fintech offerings. “We are now among the top three processors in the UK Financial Services industry for certain complex lending and investment product categories and it has helped us further consolidate our presence in Europe. Target gave us a reference point which helped us pitch to some of the largest banks who are now our customers. Right now, the focus is on the UK but we are also looking at the US. At around $ 30 – 40 billion, the size of the global market is huge and offers plenty of opportunities for growth,” continues Manoj.

The healthcare space followed with the acquisition of an 85% stake in The HCI Group, a global leader in healthcare IT consulting, in March 2017. “The market consists of three main segments – pharma / device manufacturers, healthcare providers including hospitals and the payers which are essentially health insurance companies. Our healthcare vertical largely focused on Lifesciences and pharma companies but we had very little presence in the providers and payers segments. HCI works with some of the world’s most prestigious Tier-I healthcare service providers, primarily in the US and UK and will help enhance our capabilities in the provider segment and consolidate our presence in the healthcare vertical,” says Manoj.

Perhaps the jewel in Tech Mahindra’s M&A crown is Pininfarina, the legendary Italian automotive and industrial design house which has designed some of the world’s most iconic cars since its inception in 1930.


Perhaps the jewel in Tech Mahindra’s M&A crown is Pininfarina, the legendary Italian automotive and industrial design house which has designed some of the world’s most iconic cars since its inception in 1930. “When it comes to automobiles, design and style are just as important as functionality and Pininfarina offers a heady combination of high-end styling and engineering services to complement our existing engineering capability. In all, the acquisition will help us leverage our presence in 90 countries, including the US and China and gain access to over 780 customers, including iconic marques like Ferrari, Alfa Romeo, Maserati and Peugeot.

We will, thus, get an opportunity to influence product conceptualization, design and styling through Europe’s best-in-class design house. It also augments our Transportation, Aerospace & Industrial Design offerings, while our global delivery model will lend Pininfarina a newly heightened scale to its operations and give it a stronger foothold in Automotive Engineering Services,” concludes Manoj.

“At Mahindra, true to our philosophy of ‘Rise’, we believe in pioneering mobility solutions. Around a decade ago we began investing in EV technologies and products and launched India’s first EV, the e2o - 100% designed and developed in India - a true ‘Make in India’ story. Recently, we announced the next phase of our EV strategy, EV 2.0, which lays out a clear roadmap for developing next generation EV technology, high-end electric powertrains, aspirational products and connectivity solutions,” says Dr. Pawan Goenka, Managing Director, Mahindra & Mahindra Ltd. as he holds forth on the value that the acquisition will bring to M&M’s auto business.

“For premium vehicle development, we are in discussion with Pininfarina, but the project kickoff is some time away. This will be a Pininfarina branded, aspirational, performance car, which will be very quick off the block, offer a long range and the legendary Pininfarina design. With the kind of technology that will go inside this car, it will be an expensive product and would be primarily for markets outside India, but can be brought to India if there is sufficient demand,” he continues.

“Pininfarina has been associated with creating objects of desire since its inception in 1930 and in this long journey, they have gained credibility, enormous experience, knowledge and insights, processes, an international network, infrastructure and have effectively developed a DNA that ensures that their creations are imbued with a sense of desirability. By associating with Pininfarina in the design of all our products, by engaging them in the engineering and production phases, we will be ensuring that their innate ability to create objects of desire gets transferred to our products.

Almost immediately, I would expect the design language to achieve a sense of international quality. We would not deviate from our path of delivering the rugged designs that our customers associate with Mahindra but we will be able to deliver it with a certain panache that is the hallmark of the design house,” says Dr. Rajan Wadhera, President & Chief Executive - Truck & Powertrain, Head - Mahindra Research Valley as he outlines the value that Pininfarina will add to Mahindra’s existing design language.

While the M&A juggernaut at Mahindra continues at full speed, helping the Group gain scale and depth, Partha is not resting on his laurels, but has set his sights higher; he is looking for ways to enhance the value offered by M&A, especially to external stakeholders. With this in mind, in 2013 the company set up an innovative & inclusive platform- Msquare Alliance, to cater to the M&A needs of Mahindra’s eco-system of vendors, dealers, etc. “There is a tsunami of M&A happening below the radar. There are people who you and I do not meet who are striking deals for growth. This implies a lot of potential for value added services in the M&A space, especially to the underserved sectors. Msquare Alliance resonates with our philosophy of Rise as it helps our vendors and dealers grow along with us. Ultimately, I want to take M&A to the 10x level, making it a potent driver for growth within the Group & its ecosystem,” says Partha, Mahindra’s M&A man, as he shares his BHAG for the future.


Calculated risk
You cannot wish the risk away so you must plan for it, understand it & play it as strategically as possible

Choose your target lest your target chooses you
This is like dressing the bride when she is not aware that there is a wedding. It’s important to identify your target and initiate dialogue even if the company is not on the market because if you let go when the target is ready, you may miss out on an opportunity.

Stick to the knitting
This implies adjacency to one’s current industry or business. If you move away from your ‘knitting’ you must be mentally prepared for the long haul as the learning curve will be quite steep and returns will take longer.

Stay prudent
Never bite off more than you can chew and don’t bet your last dollar on a deal. Bigger the deal - bigger the return is a myth.

Synergy is the differentiator –
The deal must add synergy to your current operations. In fact, here, 1 + 1 must equal 3 or you are in for a tough ride.

Price does not equal value
A higher price does not automatically imply a higher value. Today, we see that even small companies in the internet space like Facebook offer extraordinary value. Moreover, dealing with a small company one-on-one may be easier as the target may not be eyeing the open market.

Value creation is important
If you can get a higher share of the pie, control is not so important. For instance, in the case of the deal between Mahindra and CIE, we ceded majority control but the deal resulted in substantial valuation for all the three companies involved.

Negotiate wisely
If you are not ready to walk away from the table do not enter the room. Don’t let pressure get the better of you as you may end up compromising on your position or value. As John F. Kennedy said, “let us never fear to negotiate but let us never negotiate out of fear.”

Set realistic expectations–
Most deals require a certain amount of time to blossom but at the same time know when to let go of a dud. It’s important to strike the right balance.

Stay people focused
Jack Ma once said, “We’re never in lack of money. We lack people with dreams, (people) who can die for those dreams.” When you acquire a company you also acquire people and how well we integrate them with our current operations is an important measure of success.