Global sales to account 50% of total farm equipment revenue in 3 yrs: M&M

Mahindra & Mahindra (M&M) is revving up globalisation of its farm equipment sector, targeting 50 per cent of overall revenue of the vertical to come from international markets over the next three years, according to a senior company official.

The company is focussing on three key markets --Americas, including the US, Canada, Mexico and Brazil; Japan and Turkey to be the primary growth drivers.

It expects revenues from Americas to touch USD 1 billion in the next three years, up from USD 600 million at present, while it is also aspiring for business in Japan to touch USD 1 billion over a period of time as compared to USD 450 million currently.

Besides, the homegrown farm equipment major is also charting out strategy to re-enter China in the implements segment after exiting from an earlier joint venture for tractors.

The farm equipment sector (FES) of the company had clocked a revenue of USD 3.4 billion in 2017-18.

"Currently, our global operations constitute 37 per cent of the revenues of FES. Over the next three years, we hope to see this go up to 50 per cent," M&M President - Farm Equipment Sector Rajesh Jejurikar told PTI in an interview.

He said the company has drawn up a globalisation strategy with a differentiated strategy for each of the three key regions -- Americas, Japan and Turkey.

In Americas, Jejurikar said the company has recently entered the above 80 hp (horse power) to 120 hp segment in US and Canada catering to the income producing segment such as commercial operators, landscapers and hay management.

"Up until now in North America (US and Canada) we were only in the 80 hp and below segment catering to rural lifestylers, who are typically hobby farmers. We are number three in the segment," he said, adding still M&M was not present in hardcore agri segment in North America where there is requirement for very big machines.

The other aspect of strategy in Americas is to expand further in markets like Mexico and Brazil, where the company is a relatively new entrant.

"These are agricultural markets and we have been there only for last couple of years. We are competing in the agri space there," he said.

Stating that there is a lot of similarity, specially with Mexico and India from agro-climatic point of view and the type of crops grown, Jejurikar said M&M's Indian products are suitable and accepted very well in these markets.

"The challenge for us is to create brand awareness and build distribution network. We are doing that by creating our own subsidiary Mahindra Mexico and Mahindra Brazil," he said.

Overall in Americas, Jejurikar said, "We expect revenues to be USD 1 billion from USD 640 million over a period three years."
In Japan, he said, "We are at USD 450 million at present. Our aspiration is to reach USD 1 billion but there is no timeline set for it."
When asked about plans for China, he said, "We are putting in place a strategy to return to the USD 25 billion farm equipment market in due course of time. We plan to venture on our own rather than look at a JV."