Q&A: Pawan Goenka, President, Mahindra & Mahindra

'Electric cars need more state incentives'

Mahindra and Mahindra, market leader in the farm equipment sector, plans to treble the manufacturing capacity of its new mini-tractor. It also has plans for its car lines. In an interaction with Business Standard, M&M’s president, automotive and farm equipment sector, Pawan Goenka, talks on some of these. Edited excerpts:

With the Ssangyong deal through, how soon can we expect to see some of the SUVs from the Korean automaker come into India?
We are currently doing market research on two SUVs from the Ssangyong stable, the latest Korando C and their most popular model, Rexton. If things go well, we expect to bring in these SUVs into the Indian market by the end of next year.

How has the farm equipment segment grown this year?
The overall tractor industry has grown by 20 per cent so far this year till November. And, Mahindra has done better than the industry average. The industry sales figures are estimated to touch 460,000-480,000 units by the end of this financial year, and we expect to account for more than 40 per cent of this. Currently, the Mahindra brand has a 29 per cent market share, while our Swaraj brand enjoys around 12.5 per cent share.

In revenue terms, the overall industry size is around Rs 22,000 crore. The market growth has beaten all forecasts, but as labour shortage in farms is increasingly becoming an issue, demand for farm equipment has witnessed a steady rise.

What has been the response to the new low-cost tractor, the Yuvraj?
Great. We’ve already managed to sell around 3,000 units in the first eight months of this fiscal and hope to end the year at 5,000-6,000 units. Our Yuvraj sales are constrained by production concerns. We currently manage to produce around 500 units per month at the Rajkot facility.

Do you plan to ramp up its production?
We have outsourced the manufacturing of the mini-tractor to Rajkot-based P M Diesel, and now plan to ramp up the production from the current 500 units per month to 1,500 per month. We enjoy a monopoly in the small tractor segment and there is huge potential for growth, since 80 per cent of farms in India are less than five acres in size. Only one per cent of these use tractors.

So, we are going strong on expanding the Yuvraj production capacity, as we plan to enter new states with the product. We sell it only in Gujarat and Maharashtra, and plan to enter Tamil Nadu, Karnataka, Madhya Pradesh and Rajasthan. Within the fourth quarter of the current fiscal, we will enter at least some of these markets. Then, based on the demand forecast, we can look at having satellite plants for the Yuvraj elsewhere in the country. Investment on capex at Rajkot is minimal, around Rs 5-10 crore.

What about plans of setting up a new tractor plant?
Yes, we are planning one somewhere in the southern states. I can’t specify the location, but the investment would be more than Rs 200 crore. The plant would have a capacity of 50,000 tractors per annum in the first phase, expandable up to 100,000 per annum.

When can we expect to see a second car from the Mahindra-Reva stable? And, when do you plan to make the Reva available across more cities?
We are now working on the Mahindra-Reva NXR, a four-seater car and hope to launch it some time next fiscal. We have already started selling the Reva-I in six cities from just Delhi and Bangalore. Expanding the footprint would require more incentives for electric vehicles from individual state governments. The recently announced subsidy scheme from the Ministry of New and Renewable Energy is most welcome, but to make electric cars viable, more incentives are required from states.