Mahindra & Mahindra eyes overseas markets for growth.

Mahindra & Mahindra eyes overseas markets for growth.

29 April, 2017

Mahindra & Mahindra says its farm equipment division head Rajesh Jejurikar is on a mission. And the mission resonates with that of the government. 

"We will look at doubling the income of farmers," says the 52-year old. The nation's largest SUV and tractor maker wants to bring the latest farming technologies to India, and see how to customise those for the benefit of the Indian farmer, including the one whose landholding is marginal. 
While the company is bullish on India, for growth, it is looking global, where the 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 agriculture equipment is even smaller. 

In 2011-12, Jejurikar, then the chief executive of automotive division, left Mahindra after the blockbuster launch of the XUV 500, to join media firm Zee EntertainmentBSE -0.51 % as its president and try out something different. He returned barely 10 months later, to lead the farm equipment division, where again his mandate was to do things differently. 

Mahindra was already the global No. 1 in terms of tractor sales, yet the company was addressing just the home and a few overseas markets. As much as 95% of the division's revenue came from tractor sales in India. That was a risk. 

India is too dependent on monsoon rains with about two-thirds of its farmland having noirrigation facilities. Farming, and so sales of farm equipment, takes a hit when not enough rains fall. Droughts have become more frequent in recent years than in the past. 

Mahindra had to look at ways of derisking the operation. Going global and expanding further into farm mechanisation from just tractors were among the options. In a recent interaction with ET, Jejurikar called it "expanding of the pond". 

Over the next few months after he returned to Mahindra, Jejurikar covered the length and breadth of the country and also travelled to several foreign markets. 

He and the strategy team put together a plan to target a piece of the $150 billion global opportunity, more than $90 billion of that in the non-tractor farm equipment space. It predicts the non-tractor market will grow to $179.3 billion by 2023. 

They wanted to build Mahindra as a global farm equipment brand. Taking a piggyback ride was one of the ways to achieve that. Since 2014, Mahindra picked up significant stakes in three different companies —Mitsubishi Agri Machinery, Sampo Rosenlew and Hisarlas— in Asia and Europe. It has also scanned more than a dozen companies with which it could tie-up to gain technology and expand market coverage. That was a new beginning and the work is still ongoing. 

The farm equipment business is key to the overall growth of Mahindra, which also makes popular SUVs such as the XUV 500 and Scorpio. This segment has been growing faster than the automotive business, where it is facing headwinds with heightened competition in the SUV  space and new and tougher regulations. In fiscal 2017, volume in the automotive sector declined marginally, while the tractor business grew 23%. 

Tractors have been returning healthydouble digit margins of 14% to 17.5% over the last three years . While the share of farm equipment division in total revenues ranges between 33-35%, its contribution to the operating profit has been 35-50%. 

Under the new game plan, Mahindra has set an ambitious target. It expects the share of non-tractor farm equipment business in total revenue to grow to 20% by fiscal 2019 from a mere 4% at the end of December 2014. By then, it also aims for global operations to account for half the total revenue of the division, from 30% in 2015. 

The company is banking on technology it got access to through recent stake purchases and product understanding to reach the targets. When Mahindra goes for acquisitions in the farm equipment space, it isn't looking for big deals, but smart buys into what it calls islands of excellences, or companies which can offer it technological capabilities. 

On its own, Mahindra would never have gone to Japan. It is the acquisition of a stake in Mitsubishi Agri that gave it a presence in Japan. Out of half a billion dollars turnover that Mitsubishi Agri generates today, almost 40% comes from the farm equipment space and largely from rice planters, which is one of the core areas of focus for Mahindra. Mahindra spent $40 million for a 33% stake in Mitsubishi Agri in May 2015. 

A 35% stake in Finnish harvest equipment firm Sampo Rosenlew and 75.10% of Turkey's Hisarlas came to its kitty for $19-20 million each in 2016-2017. 

These are small deals, but the value they offer is big in terms of getting into new segments, technology and geographical reach. In each of these, Mahindra has a strong board position according to Jejurikar, this is a great way for Mahindra to build the brand globally. 

Mahindra already has tractor manufacturing businesses in China, Japan and the US, and is entering markets like Brazil and Mexico. The company has carefully chosen these countries, which are large farming markets themselves. It intends to also export from these bases to nearby countries. 
On the non-tractor farm equipment business, the focus will be on the emerging markets of India, China, Africa and Latin America. And here, the immediate target is rice transplanters and combined harvesters. 

Mitsubishi Japan will be the base for rice transplanters and Sampo Rosenlew for combined harvesters. These two adjacent segments have a global market for $30-50 billion. 

Apart from expanding in the global non-tractor market, Mahindra wants to play a proactive role in driving mechanisation in the Rs 5,000 crore Indian market for non-tractor farm equipment. 

Already some benefits of global acquisitions have started showing result in the domestic market. In India, Mahindra introduced tractors for the horticulture segment and rice transplanters from the Mitsubishi portfolio. 

It is also in the process of making distributors more digital savvy, as part of an initiative called Farming 3.0. It is also going beyond selling tractors to providing solutions to farmers, including farming implements and advisory at the dealership. 

Mahindra aspires to be a new Kubota Tractor Corp in the global farm equipment market, say people in the know of the company's plans. 

The rise of Japan's Kubota is much similar to the rise of Hyundai Motor, which successfully challenged global auto majors with its value for money cars. 

"We (Kubota) think they really created a fantastic role model on how you can go and create a global enterprise," said one of the people. "They challenged the status quo in the world and created their own presence." 









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India’s Tractor Export June'20 decline by 7%

India’s Tractor Export June'20 decline by 7%

The Indian Tractor industry recorded exports of over 5,760 units during June'20. While we saw a massive growth of 23% in domestic tractor sales, tractor exports registered a decline of 7% in June'20 v/s June'19. The major tractor export markets of the ‘Made-in-India’ tractors are US, Nepal, Bangladesh, Mexico and Italy. - International Tractors Limited (Sonalika & Solis) maintain no.1 position of tractor exporter in June'20 and also registered a growth of 3.43% with 1509 Units. - New Holland Tractors grew an impressive 50% YoY and was the second-best tractor exporter for the month. It was able to increase its export Market Share to 19.32% in June’20 v/s 11.96% in June’19. - John Deere was able to grow slightly in terms of export market share in June’20. John Deere Export 941 units in June’20 v/s 972 units in June'19, a decline of 3.2% - Tafe Group export 820 tractor units in June'20, which is 7% lower than the June'19 - World's No.1 Tractor Manufacturer Mahindra Tractor exports only 700 units in June'20 v/s 1215 units in June'19. It also registered a Market Share fall of -7.5% in June’20 v/s June’19!

Record Braking Tractor Sales in June 2020: Overall 22.45% Jump in Sales.

Record Braking Tractor Sales in June 2020: Overall 22.45% Jump in Sales.

Indian Tractor industry bounce back in June’20 and records the highest sales in June ever. Domestic sales were 92,888 units in June’20 against the 75,859 units in June’19, registered 22.5% growth .The surge in sales has been attributed to a robust rabi harvest, the timely arrival of the monsoon to aid Kharif sowing, and government sops such as direct benefit transfers. Mahindra Tractors (Mahindra+ Swaraj) Records Second Highest June Sales Ever. Mahindra recorded 35844 unit sales in June 2020, whereas in June 2019, Mahindra domestic sales were 31879 units. This displays that Mahindra sales increased by 12.44%. But they lost their market share with 3.44% in this month. Meanwhile, its export shipments declined 42 percent during the month at 700 units against 1,215 units in the same month last year. The company tractor total sales for the month were at 36,544 units, up 10 percent from 33,094 units in June last year. In June’20, Mahindra Tractor loses a 3.44% market share. TAFE Group ( Massey Ferguson + Eicher ) sales recorded 35.26% growth, which is quite impressive. In June 2019, TAFE sales were 14109 units, and in June 2020, it was recorded at 19084 units. That shows 4975 unit growth. Along with this, Tafe also gained ~2% market share this month. Sonalika Tractors outpaces industry by 2.4X times and with a new record of ever highest domestic sales of 13,691, registering 55% growth against the industry growth of 23%. Sonalika domestic sales recorded 13691 units in June 2020, and it recorded 8827 units in June 2019. They also gained 3.10% market share during June’20. Speaking on the performance, Mr. Raman Mittal, Executive Director, Sonalika Group, said, “Beginning of Q1 this year when the first-ever lockdown was announced. A company had decided to put all our energies with a positive effort not to de-grow in Q1. Today, the entire team is proud that we have not just achieved our goal but also have registered an overall growth of 5% in Q1, which is highest for the industry. Escorts Tractor matched the overall industry growth of ~23% in June’20. Escorts sold 1975 units more in June 2020 in comparison to June 2019. In June 2020, Escorts domestic sales were 10623 units, and in June 2019, it was 8648 units. Escorts Company said in a release, “We have seen unprecedented demand this month. The industry is expected to grow significantly backed by pent-up demand of the lockdown period, better farmer sentiment due to good monsoon prediction reflected in better than normal Kharif sowing, better rural cash flows owing to record crop output and crop prices, and reasonably good availability of retail finance. The industry growth is widespread, with positive growth in almost all markets, barring one or two. Our inventory levels, both with the company and with channel have been lowest ever. After necessary permissions, we were able to run our factories in multiple shifts to achieve production at about 90% of the capacity. Supply chain situation, though better than before, continues to remain volatile." John Deere Tractor is continued to lose market share for the past few months. Still, John Deere is running sort of supply as they are unable to the mange supply chain in India. John Deere tractors domestic sales were dropped by 12.30% from 6683 units to 5861 units in June 2020. Due to lose in sale John Deere looses 2.50% market share in June’20. New Holland Tractor Records Highest June Sales Ever. After a decline in April & May Month, New Holland Tractor recovered with 50% sales jump in June 2020. New Holland recorded 3845 unit tractor sales in June 2020, which is 49.73 % higher than tractor sales recorded in June 2019. New Holland also added a 0.75% market share in last month. In June 2020 Kubota tractor sales recorded 1428 units, 50.16% higher than tractor sales recorded in June 2019. Kubota also added a 0.28% market share this month. VST Tractor - 789 units tractor sales recorded in June 2020, and in June 2019, Vst domestic tractor sales recorded 644 units. This clearly shows a 22.52% increase in Vst domestic tractor sales. Captain Tractor also gained 50.14% in its domestic sales this month. Captain tractor domestic sales recorded in June 2020 were 518 units and in June 2019 were 345 units. They also acquire a 0.10% market share. Indo Farm Tractor domestic sales were 303 units in June 2020, and it was recorded 210 units in June 2019. That is a clear rise of 44.29% domestic tractor sales of Indo Farm Company. Force Tractor domestic sales were 263 units in June’20, and it recorded 283 units in June’19, which indicates 7.07% of the drop in the tractor sales. Ace Tractor increased 30.61% of domestic sales in this month, which is a good sign for the Ace Tractor Company. ACE tractor domestic sales were 256 units in June’20, and it recorded 196 units in June’19 Preet Tractor domestic tractor sales increased by 43.26% to 202 units in FY20 against 141 units in FY19. Same Deutz Fahr Tractor Company faces a massive decrease in domestic tractor sales. Sales dropped by 51.73% in June 2020. SDF sold only 181 Tractor in June’20 against 375 Units sold in June’19. Crisil has said that despite a 37% year-on-year decline in volumes in April and May, FY21 tractor sales will likely be just 1% below last fiscal’s numbers, in sharp contrast to a double-digit fall estimated for other vehicle sales. It had earlier estimated an 11-13% fall in tractor sales in FY21.

Sonalika Tractors domestic sales grow 55% to 13,691 units in June'20 , exports up 3.4%

Sonalika Tractors domestic sales grow 55% to 13,691 units in June'20 , exports up 3.4%

Crosses all-time highest milestone with overall sales of 15,200 tractors & 15.4% market share Strengthens No.1 position in Exports India’s one of the leading tractor manufacturing brand & No.1 Exporter from the country, Sonalika Tractors outpaces industry by 2.4X times and with a new record of ever highest domestic sales of 13,691, registering 55% growth against the industry growth of 23% and overall sales of 15,200 tractors & 15.4% market share in June’20. Speaking on the performance, Mr. Raman Mittal, Executive Director, Sonalika Group, said, “Beginning of Q1 this year when the first-ever lockdown was announced we as a company had decided to put all our energies with positive effort to try not to de-grow in Q1. Today, the entire team is feeling proud that we have not just achieved our goal but also have registered an overall growth of 5% in Q1 which is highest for the industry. It is a matter of great pride for us that not only in tractor industry but also in the automotive, two-wheeler and CV industry, Sonalika is the only company to register maximum growth in these tough times. We are extremely delighted with the overall robust performance in June’20 with 15200 tractors which is our highest ever.” Overall in Quater 1 of FY21 Sonalika tractor sales registered 5.37% growth in the domestic market. Sonalika Tractor Year 2020 Year 2019 Growth% April 749 5612 -86.65 May 7640 6515 17.26 June 13691 8827 55.10 Quarter 1 22080 20954 5.37% Commenting on the winning strategy he added, “The key to our success rests on 4 areas: First, our investment in the largest vertical integrated manufacturing unit which has helped us to ramp up our production within a very short span. We had already reached 80% utilization in Wk4 May itself and in June we continued to operate at optimum level. Second, being a tech savvy company, our entire supply chain is technologically enabled. We have a complete end to end supply chain management solution in-house. All our 24 depots spread across the states are inter-connected enabling us to keep a track of the tractor delivered on real time basis and we manage our production as per the consumption. This has helped us to maintain optimum level of stocks across our depots and dealerships. Third, our focus to keep innovating, developing and launching new product continued during the time of COVID19. We had a series of new products that were launched during this period, which have helped the farmers immensely to increase their productivity, reflecting in volume gain for our tractors. Fourth, we keep strengthening our coverage. Last year, we widened our existing network of channel partners and are continuing to do so even now. With this we have the largest network of channel partners, as wherever there was a business opportunity our teams were present to capitalize on the same.” Speaking on Sonalika’s future plans, he said, “The tractor demand and farmer’s sentiments have picked up on account of various conducive factors like government initiatives including increase in MSP price, favorable monsoons and bumper sowing of summer crops. The farmers are happy with the money in their hands-on account of a good rabi harvest. This positive sentiments are expected to continue and we are well-positioned to gain from the same. We are the no.1 brand in exports from India, thus making our Nation proud globally. We take pride as Indians and are ready to challenge any situation with Sonalika’s Passion and Unstoppable spirit. All our efforts and actions are set to continue on this growth journey for our great Nation”.

एस्कॉर्ट्स ने जून में 23 प्रतिशत ज्यादा ट्रैक्टर बेचे

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