When Anand Mahindra set out on a career with the Mahindra & Mahindra (M&M) Group in 1981, with Mahindra Ugine Steel Co. (MUSCO), it wasn't the best of times for the Harvard-returned scion to plunge into the family business. Demand for steel had ebbed and the industry was in the throes of a recession. For Mahindra, who joined as Executive Assistant to the Finance Director, the MUSCO stint was the proverbial baptism by fire. By the time he rose to President & Deputy Managing Director of MUSCO in 1989, Mahindra had survived another cyclical downturn. He joined the flagship tractor and automaker M&M in 1991 and guess what: The auto industry was struggling with poor demand conditions. "I have been through three recessions. Almost every time I started somewhere, there would be a downturn. I would ask myself: 'Why me?' But from the managerial perspective, it gave me a chance to prove myself. At M&M today, it's a cultural thing-when the going gets tough, M&M gets going."

At 51, the Vice Chairman & Managing Director of the Rs 12,000-crore conglomerate can look back on his stint at MUSCO with pride (and some relief). After all, it was at the specialty steels firm that he plotted the group's entry into areas like real estate development and hospitality management. Today, those are just two of his non-core businesses that are threatening to put M&M's flagship businesses of tractors and automotives in the shade. In fact, leave aside those two, and you'd realise that Mahindra's companies in infrastructure (like Mahindra Holidays and Mahindra Gesco), information technology (Tech Mahindra and Bristlecone), financial services (Mahindra Finance and Mahindra Insurance), systems & technologies (MUSCO and Mahindra Engineering Services) and trade (Mahindra Intertrade) pitched in with 43 per cent of the group's profits in 2005-06 (see Not Just Tractors And The Scorpio). "I sometimes pinch myself and wonder if this is for real. I can't think of any business or sector (in the group) that is not doing well. Our companies have reached a point where they are able to leverage the economy," says Mahindra.

That's perhaps why in four years Mahindra has been able to more than double his group sales, treble profits and-most importantly-create dollops of shareholder value by registering an almost seven-fold jump in market capitalisation of his seven listed companies (as per data from the Centre for Monitoring Indian Economy). It also propels him firmly amongst the top Indian business families, behind the Tatas, the two Ambanis, the Aditya Birla Group, the Sterlite Group and Bajaj (see Rising Star). And, going by the number of companies that have reached critical mass (or are in the process of doing so), there is plenty more value waiting to be unlocked at this diversified conglomerate. Tech Mahindra, the it play that focusses sharply on telecom service providers and equipment manufacturers, has lined up an initial public offering (IPO), which should be able to add a billion dollars to the group's market cap, say analysts. Says Ulhas Yargop, President (Telecom & Software), which also includes sap & supply chain consulting company Bristlecone (and which analysts speculate could be a part of the Tech Mahindra IPO): "An IPO will enhance the brand image of Tech Mahindra, which will be useful in new customer relationships. Our employees who have stock options will be able to see the value that their efforts have created. It will also create a currency for inorganic transactions."

Following The IPO Route

Marquee clients: Infosys' campus in Mahindra World City

The proposed IPO for Tech Mahindra follows in the footsteps of Mahindra Finance, which got listed early in the year, and now boasts a market cap of Rs 1,600 crore. Another company that will go for IPO in the not too distant future is Mahindra Holidays & Resorts (MHRL). In systems and technology (Systech, as its known within M&M), the demerger of an acquired forgings unit of Amforge Industries into Mahindra Automotive Steels will give the group another listed entity with a market cap of around $175 million (Rs 805 crore). And then there's the red-hot play in real estate/special economic zones or SEZs, Mahindra Gesco (market cap last fortnight: Rs 1,800 crore), which completes the picture for Dalal Street investors. Huzaifa Suratwala, auto and auto ancillary analyst at Emkay Share & Stock Brokers, says that on a target price of Rs 850, he would fix a value of Rs 300 on M&M's subsidiary businesses. "The profit contribution will sustain in the current year, although once the Logan (the mid-sized sedan in a JV with Renault) is launched, things could change, but only in the medium to long term," he adds.

True, Mahindra has two big-bang JVs ready to roll out cars and trucks and buses, with Renault of France and International Truck and Engine Corp. of the us, respectively. And in tractors, he continues to look for overseas acquisitions in a bid to challenge global #1, John Deere. Yet, some of his subsidiary businesses-"thoroughbred racehorses" he calls them-have king-size ambitions and opportunities of their own. The Systech sector, for instance, is chasing a sales and market cap of $1 billion (Rs 4,600 crore) by 2010. International Truck has committed to buying $100 million (Rs 460 crore) of auto parts from India, and this figure will go up to $300 million (Rs 1,380 crore). And the fastest growth in profits is being registered unsurprisingly by Tech Mahindra-in 2005-06 that growth rate was 31 per cent on the topline and 130 per cent in profits over the previous year. "I have often told Pawan Goenka (Head, Automotives): Unless you're careful, you're not going to be the largest profit generator any more. Forget outside, there's great competition between the two of them to see whose bottom line is larger," quips Mahindra.

Margin of safety: ED (Finance & Corporate Affairs) Doshi is making sure M&M has headroom in case of a downturn

The race for market cap and profitability is backed by solid blueprints in each sector, with acquisitions, expansions into new geographies, and entries into new businesses making up key pieces of that growth game plan. For instance, Hemant Luthra, Head of the Systech sector, points out that market cap has more than doubled from $125 million (Rs 575 crore) to close to $300 million last year, on the back of acquisitions like Amforge and Stokes of the UK (in forgings), as well as Plexion (in engineering services). In three months, he expects to be up to $500-600 million (Rs 2,300-2,760 crore) with an acquisition in Europe. "With the inorganic moves that we will make, the next huge value creator post-Tech Mahindra's IPO could be the systems and technology sector," says Mahindra.

Betting Big On Infrastructure

In the infrastructure development sector, the two companies gunning for growth are MHRL and Mahindra Gesco. Arun Nanda, Head of this sector, sees two opportunities for MHRL: One, acquiring resorts (typically of 100 units) in neighbouring countries, the Middle East, perhaps in China and certainly in the Alps. And on the timeshare marketing side, he wants to expand in the Middle East as well as in the us. But what easily excites Nanda these days are his grand ambitions for building SEZs in Jaipur and Pune, at a total outlay of Rs 5,000 crore. For him SEZs are an infrastructure play and not a property one (as it is perhaps for many with SEZ plans). The M&M Group, for its part, has experience in putting up SEZs in public-private partnerships, having done so in Chennai. It wasn't easy, and it's taken all of eight years to get the integrated township Mahindra World City (that's what it's called). "It's been tough, but satisfying," says Nanda. Mahindra World City today has marquee clients like Infosys, BMW and Braun, and Nanda foresees a smoother ride with the other SEZs. In Jaipur, for instance, Nanda can breathe easier as he's found an anchor client-an imperative in filling up the SEZ-in Progeon from the Infosys Group.

Mahindra says in these times being asset-light is a virtue. Yet, the investments he has lined up aren't small beer by any yardstick. But as Bharat Doshi, Executive Director (Finance & Corporate Affairs), points out, M&M's financial strength is not an issue. "We have a surplus of roughly Rs