24 September, 2016
From being just another tractor maker, Tafe has grown to become the world's third largest exporter of the vehicles in the past 30 years under the stewardship of its chairman and CEO Mallika Srinivasan. In an interview to TOI, Srinivasan explains how she turned the 56-year-old company around
What are the highlights of your three-decade journey in Tafe?
Let's start from 2000. Back then, we had a company with a very strong foundation, and well-entrenched core values.The change began with the Eicher buy (in May 2005 Tafe acquired Eicher's tractor and components business), when my father was around. This is not a transition story, but a transformation. When the economy was opening up, we had to take on multinational companies and international competitors. There was a compelling need to transform or build new skillsets to compete. Or, we would have been left behind. We took help from an IIM professor and external agencies.
We drafted our vision statement. We never said we want to be number one in sales, instead we said we want to be the farmer's first choice by setting benchmark standards in performance and customer care. And we wanted to expand our global presence.
From there, we put in a growth strategy with a good participative approach.We took Warwick Manufacturing Group's help. We built a plan to convert our vision to reality. We started to work on strategy, placed emphasis on people, and focused on chosen areas.
Over the past 10 years, we have invested significantly in product develop ment, engine design, product design, R&D, and engine development. Today, in the passenger car industry with massive volumes, there are six or seven players. Here too, we have six to seven players for much smaller volumes.
How much are you investing in technology?
We don't stop investing. It is important we invest care fully as investment has to pay. Our investments have been in relevant technology and cost-effective engineer ing. Being privately held, we do not worry about short-term gains. Ours is a cyclical industry. Whether we go up or down, we con tinue to invest. We keep look ing at opportunities to grow. We added a farm implements business, then acquired Eicher Tractors.
Tell us more about the Eicher acquisition.
It was a good match. It fitted perfectly into our strategy. From that business, we came up with a group two brand approach. Within the family, we discussed the acquisition in detail. It was my call to go ahead, but with my father's backing. It was synergistic fit in terms of geographies, products and culture. Eicher was in UP and Haryana, and Massey Ferguson was strong in Rajasthan and Gujarat. Our payback from the acquisition was faster than our estimates. The profits of Eicher have risen, and we increased the R&D capabilities of Eicher. The engines we got were worked around and used in telecom and other non-cyclical businesses like gensets. We've had organic growth through agri implements and inorganic growth through Eicher acquisition.These have helped us combat our competition.
Then, we had to get our international play right. We had an existing partnership. We strengthened that partnership with AGCO reasonably successfully. We have gained through export of aggregates.
Tell us the impact of all these actions on growth?
We are in a dominant position in the Indian market. We are the world's third largest exporter of tractors. We are very well positioned for the future. We have replicated a cost-effective Indian way of doing business in export markets. We have transitioned as an organization from being vulnerable (with technology) to world beaters. We are playing a global game.
What is the way forward? What will Tafe look like in 2025?
Tafe in 2025 will continue to strive to be the farmer's first choice. We have the foundation to play an international game and be a major player in the farm mechanization space.
How long will you remain a privately-held family entity?
What's wrong with that? We have built value for stakeholders fabulously.We are probably one of the largest unlisted companies in the country. There is no compelling need to get listed. The focus is to make the company stronger even as we understand that we are in a cyclical business. Our idea is to reduce the shocks in a downturn.
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