Mahindra & Mahindra is keen on increasing its global presence in tractors which will see a sharp focus on markets like Brazil and Turkey.
According to Pawan Goenka, Executive Director & President (Automotive & Farm Equipment Sectors), M&M is already doing well in the US where it sold over 10,000 tractors last fiscal. The challenge now is to replicate this in other markets with a range of exciting offerings.
“Most of our volumes are coming from India and the key is to have a stronger presence overseas. This year will be a good test for us in Brazil and we will also look at Turkey,” Goenka said. In addition, possible acquisitions of tractor companies outside India will be on M&M’s radar.
As part of this effort to explore new geographies, the company believes it is important to take its tractor business “to the next level” which will begin with the launch of a new model, codenamed M-Star, later this week.
According to Goenka, there is an impression that M&M’s tractors are not as good as those offered by multinationals even though it is the world’s largest tractor maker by volumes (over 2.5 lakh units sold last fiscal). This is where the next slew of launches, beginning with the M-Star, “will show that Mahindra tractors are second to none”.
This business will also be a big pillar of support to the company’s agriculture vertical which aims at increasing productivity and income from farms. “Even though the agriculture vertical is a small business at around ₹450 crore, we have aggressive long-term plans and our internal target is to be ₹10,000 crore by 2021,” Goenka said.
While this will doubtless be a big challenge, the strong rural brand association of the tractor business is expected to play a supportive role. “The starting point for us is tractors and our focus is on the farmer and helping him increase his output and income,” he added.
From M&M’s point of view, the agriculture vertical is part of a large ecosystem where it needs to take a long-term view to ensure things are done right. “It is important to move forward in a measured, yet aggressive, manner,” Goenka said.
Going forward, M&M has two acquisitions in the pipeline for its agriculture business. It is also setting up a formulations plant for crop care in Gujarat which will be on stream in 2016-17. The company has developed a greenhouse in Nashik where it brought in technology from its auto and tractor businesses to design a cost-effective structure.
“We are not looking at just growing our market share in tractors but growing our agriculture business and exporting more,” Goenka said. He admitted that the company’s two Chinese joint ventures had not been leveraged optimally yet in the agriculture space. “China and India have similar farm practices and there will be a lot of cross-learning between the two countries,” he said.