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M&M sets up farm services unit

Our Bureau

THIRUVANANTHAPURAM, Jan. 4

THE Rs 5,000-crore Mahindra and Mahindra (M&M) has set up a farm extension services division called Mahindra Shubh Labh, which will pioneer the building of a chain of one-stop shops offering a comprehensive range of farm-gate services.

Addressing newspersons here, Mr K. J. Devasia, President and Executive Director, Farm Equipment Sector, Mahindra and Mahindra said the first extension service facility had been opened in Madurai in Tamil Nadu. The farm equipment sector accounts for almo st Rs 2,000 crore of the total turnover of M&M.

Apart from seeking to marshall at one point various farm inputs, including seeds and fertilisers, Mahindra Subh Labh offers to lift produce directly from farmers to be resold to big traders. The company would also make available services of agricultural specialists for consultancy.

Turning to tractors and farm equipment, Mr Devasia said M&M accounted for 35 per cent of the tractor market in the country. Tamil Nadu, Karnataka, Andhra Pradesh and Kerala accounted for 40,000 to 45,000 units which made for a 50-per cent market share in the southern region. The total annual capacity at the various M&M plants now is 85,000 units.

The company has been doing well on the export front with regular consignments to the US, Turkey, Egypt and South Africa, besides exports t0 neighbouring countries. The good overseas response prompted the company to set up Mahindra US, a Houston, Texas-ba sed arm, which took on itself the task of sales and service in the US.

A Vision 2005 strategy has been chalked out which aims to make M&M among the top tractor manufacturers in the world.

In the last three years, the Indian tractor industry has been experiencing a slowdown. Particularly, for the three quarters ended December 2000, the market has declined by about 10 per cent.

The major contributing factor has been the drought conditions in Rajasthan, Gujarat, Madhya Pradesh and parts of Maharashtra which, along with Uttar Pradesh, make for 80 per cent of the tractor market. Cautious approach by financing agencies, marginal or no increase in the procurement prices and minimum support prices have also contributed to the slowdown.

However, during April-November 2000, M&M volumes went up by nearly eight per cent even as the industry experienced a drop of nearly 11 per cent. This period also saw a jump of six per cent in its marketshare.

Mr Devasia attributed this ``paradox'' to what he described as the superior, fuel-efficient and cost-effective product, resulting from a customer-focussed approach in product development and customisation. This has helped the company to weather the turbu lence generated by the recent spurt in petroleum product prices also.

The company has set up a ``satellite'' assembly plant at Rudrapur in Uttar Pradesh. A suitable location is being identified in the South for setting up a second plant.

Mr Devasia said the `Bhumiputra' series launched this year had been well-received. In May, the company launched the 60-hp Arjun 605 DI. The three sub-brands, Bhumiputra, Sarpanch and Arjun, cater to different customer segments.

During the last two years, the company had been working on a channel development programme called `Sahyog', which had networked 125 out of the 400-odd dealers, Mr Devasia added.