Mahindra's Yuvraj on expansion spree

Plans to enter newer markets in 2011-12.

Soaring demand for the 'Yuvraj', the mini-tractor from Mahindra & Mahindra's (M&M) stable, the country's leading farm equipment player, has forced the company to select customers from the applications that it receives on the basis of 'real requirement' for its popular tractor model that is produced at Rajkot.

M&M is in the process of ramping up production of the Yuvraj from 500 per month to 1500 per month within the second half of this year.

"The Yuvraj was designed for small and marginal farmers who currently use bullocks to till their fields. We wanted to convert them to tractor users. So, now when we are getting more applications at our sales points to buy the tractor than we can produce it, we decided to select groups of customers on the basis of their profile, so that it reaches the target customer," said a senior official of M&M on grounds of anonymity.

The country's smallest and cheapest tractor Yuvraj, at 15 horse-power and priced at Rs 1.75 lakh instantly became a sell away hit after it was launched in July last year.

According to Mahindra officials, the Yuvraj offers a fuel-efficiency of 14 kilometers per litre (kmpl) compared to 7 kmpl of regular large size tractors and hence the long-term cost of ownership of a Yuvraj is comparable to owning a pair of bullocks.

Moreover, the Yuvraj is suitable for farms below the size of five acres, and 80 per cent of the farms in the country are below five acres, and around 99 per cent of these do not use tractors, M&M informed.

The market potential for the Yuvraj, thus, is huge, and the company has already managed to sell over 3,000 units in 2010, and aims to end the fiscal with 5,000-6,000 units. The production of the Yuvraj is outsourced to Rajkot based P M Diesel. Mahindra was producing around 500 units at its Rajkot plant.

"We have already ramped up production to around 700 units per month, and within next fiscal we plan to achieve an average production of 1500 units per month", the official said. This would require an additional investment of Rs 5-10 crore at the Rajkot plant and is also likely to generate employment for the locals.

With the support of expanded production capacity, M&M plans to enter newer markets like Rajasthan, Madhya Pradesh, Tamil Nadu and Karnataka in 2011-12.

According to the company sources, it will first enter the southern markets which it plans to do within the current quarter. Mahindra, which now has a wait period of around 15 days to a month for a Yuvraj, plans to follow a similar strategy of selecting customers according to their profiles in the southern markets too. This, indeed, is an interesting step taken by any automaker in the country where it is working to ensure that its popular product reaches its target customer.

On the back of buoyant demand M&M hopes to sell at least 15,000 to 20,000 units in 2011-12. Mahindra & Mahindra's Farm Equipment Sector (FES) division reported a 31.31 per cent increase in tractor sales in December 2010 to 16,334 units. It had sold 12,439 units during the same month previous year, the company said in a statement.