With a strong market share of over 40% in the farm equipment segment in India for several years now, Mahindra & Mahindra has continued to remain the biggest seller of tractors in the country.
With a strong market share of over 40% in the farm equipment segment in India for several years now, Mahindra & Mahindra (M&M) has continued to remain the biggest seller of tractors in the country. While it continues to grow its business in the domestic market, it has now also started to intensify its acquisitions abroad to tap the $150 billion global farm equipment market. “We want 50% of our total revenues from the farm equipment business to come from global operations by financial year 2019,” said Rajesh Jejurikar, president – farm equipment sector, Mahindra & Mahindra. “For this, we are looking for acquisitions in India and globally that can help us get more market access and help us build technological capabilities,” he added. Currently, global operations constitute almost one fourth of M&M’s farm equipment segment revenues.
The company is already a leader in the tractor business in India, and according to the company, is also the largest selling tractor brand in the world by volumes. Jejurikar said it is looking at acquisitions especially in the the farm machinery space, which basically includes all the non-tractor farming equipment. The auto major said the global non-tractor farm equipment market is worth $90 billion. “The farm machinery space is a new growth avenue for us. With the new strategy, which includes organic as well as inorganic growth we expect the share of non-tractor farm equipment business revenue to grow to 20% by FY19,” said Jejurikar.
In March 2016, M&M acquired a 35% stake in Finland based specialised harvester company, Sampo Rosenlew. This acquisition, according to the company, will help it improve its harvester business globally. The harvester technology derived from this acquisition will also be adapted for the domestic market at Indian price points.
In the last two years the company has made many other acquisitions worldwide. “We acquired a 33% stake in Mitsubishi Mahindra Agricultural Machinery, Japan, in May 2015 to cater to global rice value chain and a 75.1% stake in Hisarlar based in Turkey, to address the global range of soil preparations. All these deals will help us get into new segments and geographies,” said Jejurikar.
The company also has a presence in major markets like USA, China and Japan. Through these markets, it has also been able to enter the Mexico and Brazil markets.
The farm equipment sector is a very important part of the M&M’s business. It accounts for approximately 30% of the revenues of the auto major. Most of the earnings from this segment still comes from domestic tractor sales. In the previous fiscal, the Mumbai-based company sold 2,48,409 tractors in the domestic market witnessing a growth of 23% over the previous year.
The company recently launched the Mahindra JIVO, a tractor in the sub 25 HP category. The company further plans to launch a product in the under 30 HP compact 4WD and one in the over 60 HP category in FY18.
According to rating agency ICRA, Indian tractor sales volumes are expected to grow by 9-10% this fiscal led by an expectation of a normal monsoon, healthy reservoir levels in the country and the government’s thrust on rural spending.