Betting big on the farm sector, homegrown conglomerate Mahindra group is gearing up for a big play in agriculture, leveraging on the brand equity of its tractors, to make it a significant revenue and profit generator in the next five years.
The Mumbai-based group, which forayed into agri-segment in 2010-end, is keeping options open for acquisitions in the range of Rs 100-150 crore in seeds, dairy, irrigation and crop care verticals as it looks to scale up.
Already it is working on various initiatives, including selling of grapes, apples, banana, seed potato, pulses, oilseeds, dairy and micro irrigation.
"Since we are the largest brand in tractors we have fairly high brand equity in Indian agricultural space. Therefore, what we are doing is we are taking our tractor knowledge and expanding it to complete the agri value chain," Mahindra & Mahindra Executive Director Pawan Goenka told PTI.
Bullish on the sector, he said: "The way I look into it, five years from now the agri business will become significant revenue and profit generator for Mahindra & Mahindra."
He said when the company started in 2010-end, the agri vertical had a revenue of about Rs 100 crore, which has grown to about Rs 600 crore in four years.
Goenka said as compared to the auto sector, which contributed about Rs 60,000 crore, the agri sector is small but has a huge potential to grow in future.
At present, M&M has a joint venture with Belgium-based Univeg to develop supply chain and sell fresh fruits in the domestic and international markets under the 'Saboro' brand.
Besides, it has inked a JV with Dutch firm HZPC to produce high quality seed potatoes for both domestic and export markets. It will also start trade with Kenya this year by importing pulses and exporting rice.
In mustard oil, M&M plans a pilot project in West Bengal for a branded product this year, while it will also kick off its dairy business most probably in Madhya Pradesh. Similarly, the group will start its own crop care formulation plant in about three months time.
"In the next few years we are going to consolidate these segments and become meaningful player in terms of size, then from there see what we can get into," Goenka said.
When asked about acquisitions, Goenka said the company would not go in for larger ticket acquisitions but look at buyouts in the range of Rs 100-150 crore.
Around one lakh farmers are associated with Mahindra across the country.
Expressing confidence that the group's agri initiative will receive a good response from farmers, he said: "There is certain level of comfort that comes into the farmer who is using the Mahindra brand...and in all of these businesses logistics is a very important part and we are able to unify the logistics backbone into all of these businesses."
He said the potential in agri sector is so huge that "30-40 per cent growth is possible if we continue to grow each new vertical and enter new segments".
The USS 16.9 billion Mahindra group has presence in various sectors, including auto, information technology, financial services, agribusiness, aerospace, defence, real estate, energy, retail, industrial equipment and logistics.