- Prime minister’s transparency push bolsters business prospects
- Policies may deliver long-awaited ‘surprise on the upside’
Anand Mahindra, chairman of India’s Mahindra group, is optimistic that the nation’s economy is poised to “surprise on the upside” thanks to the business-friendly policies of Prime Minister Narendra Modi.
“What I give him 100 percent marks for is bringing in transparency in big business,” Mahindra said of Modi in an interview Monday on Bloomberg Television. “I’m finally seeing enormous transparency, no transaction costs -- I haven’t even been to New Delhi to meet Mr. Modi since he got elected. There is no need. I have no requests.”
Mahindra, 61, said that India, long “pregnant with potential,” may finally be able to capitalize on its economic opportunity. India’s gross domestic product expanded 7.3 percent in the October-December period, a three-quarter low though still the fastest pace among major emerging markets.
Modi, who came to power after winning a majority in India’s lower house of parliament for the first time in 30 years, had raised expectations of faster economic reforms among investors. He has seen some success, with a shift toward market-based energy pricing, auctions for coal mines and telecom licenses, and an inflation target implemented under the guidance of central bank Governor Raghuram Rajan, despite facing challenges with political gridlock.
“Now the current government, to continue the metaphor, is going through hard labor and people are wondering whether this is going to resolve in any output at all,” Mahindra said. “But I think things are very, very propitious right now.”
The group’s goal is to diversify and it’s looking at alternative sources of revenue generation around the world, Mahindra said, without elaborating. It’s looking to grow businesses in both “organic and inorganic” ways, he said.
Shares of Mahindra have climbed 3.8 percent this year, compared with a 1.2 percent decline in the benchmark S&P BSE Sensex. The stock traded at 1,320.20 rupees, up 0.3 percent, as of 9:35 a.m. in Mumbai.
Mahindra’s most recent push has been to expand its farm equipment business beyond tractors. The company says it’s the world’s biggest maker of tractors by volume.
In March, Mahindra agreed to buy 35 percent of Finland’s Sampo-Rosenlew Oy, which makes combine harvesters. The purchase will give the Indian company access to combine harvester technology and help establish its presence in the global market. The step followed the acquisition of a 33.3 percent stake in a unit of Mitsubishi Heavy Industries Ltd. that sells tractors, combine harvesters, rice transplanters and other farm machinery.
“The fastest growing company we have in terms of products and brand is right here in the U.S. and it’s our tractor business,” Mahindra said. “If you happen to be somewhere in an area in the country which did use tractors, I would say ‘arguably you would know what the Mahindra brand is’.”