RM STRATEGIES OF TWO MAJOR FARM EQUIPMENT COMPANIES

1.MAHINDRA & MAHINDRA 2.TRACTOR AND FARM EQUIPMENT LTD.

By:-

Disha Soni (P08014)

Garima Gupta (P08015)

Girish Kumar Sharma (P08017)

UNDER THE GUIDANCE OF

Professor S P Garg

Jaipuria Institute of Management ,Jaipur

VARIETY OF EQUIPMENT

INDIAN TRACTOR INDUSTRY- AN OVERVIEW

The Indian tractor industry is the largest in the world and accounts for one third of the global production.

Current capacity of the Indian tractor industry is 400,000 units while the sales stands at 310,000 units per year.

Major players include M&M Ltd, Tractor and Farm Equipment Ltd, International Tractors Ltd, Punjab Tractors Ltd and John Deere.

93% of the demand comes from 12 major states, of which UP is the largest market.

INDIAN TRACTOR INDUSTRY - AN OVERVIEW

• The Major export markets for Indian tractor industry are USA and China(80% - USA).

• Adequately penetrated in volume terms but under penetrated in Horse Power (HP) terms.

• Expectation by 2010: Domestic sales - 350,000 units p.a. and Exports - 60,000 units p.a.

• Long run expected CAGR - 5-7%. • Credit availability, fuel costs and monsoons are the

largest purchasing influencers.

INDIAN TRACTOR INDUSTRY - AN OVERVIEW

The tractor markets of Karnataka, Maharashtra, Tamil Nadu, and Gujarat are growing ~ 50%.

The share of high HP segment (>40 HP) tractors in the total sales (including exports) has been rising and this trend is expected to continue.

MAHINDRA & MAHINDRA IN FARM EQUIPMENT SECTOR

INTRODUCTION

Mahindra & Mahindra Ltd, Automotive Sector are in the business of Designing & Manufacturing Multi Utility Vehicles(eg: bolero, marshal, pickup.. Light Commercial Vehicles (LCVs), Cars and three wheelers) with customer satisfaction through the process of continuous improvements in all areas of operations.

Mahindra brand of vehicles have come to represent high quality, ruggedness, durability, stability, reliability, looks, easy maintenance and operational economy.

M&M's Farm Equipment Sector origins lie in a joint venture in 1963 between the Company, International Harvester Inc. and Voltas Limited, and was named International Tractor Company of India (ITCI).

In 1977, ITCI merged with M&M and became its Tractor Division. After M&M's organizational restructuring in 1994, this division was called the Farm Equipment Sector.

M&M has two main tractor manufacturing plants located at Mumbai and Nagpur in Maharashtra. Apart from these two main manufacturing units, the Farm Equipment Sector has satellite plants located at Rudrapur in Uttarachal and Jaipur in Rajasthan.

The Farm Equipment Sector as reported by the Company has a dealer network of over 450 dealers and 28 area offices.

M&M tractors has sold more than 13,00,000 tractors since its inception.

M&M, in 2004 announced that they had bought majority stake (80%) in Jiangling Tractor Company, and renamed it Mahindra Jiangling Motor Co Group (JMCG). The plant in China reportedly has a production capacity of 12,000 tractors annually.

In March 2007, M&M bought a controlling 43% stake in the Mohali-based tractor firm Punjab Tractors (Swaraj) that will reportedly increase M&M's share in the domestic farm equipment market from just over 30% to 40%.

MAHINDRA GUJARAT TRACTOR LIMITED

The company was originally incorporated in the state of Gujrat in 1963 with technical collaboration with Motokov-Praha of Czechoslovakia as Gujarat Tractor Corporate Ltd. It was taken over by Mahindra & Mahindra ltd. in 1978 (holds 60% equity) and re-christened Mahindra Gujarat Tractor Ltd as part of Mahindra Tractors.

The company is engaged in manufacturing of tractors in a range of 30-45hp which are marketed under Shaktimaan brand. They were previously marketed under the Mahindra Gujarat name, and before that the Hindustan name.

Farm Equipment Sector (FES) is a part of US $6.7 billion Mahindra group, which is amongst the top 10 industrial houses in India.

FES has a subsidiary agricultural tractor manufacturing company in India known as Mahindra Gujarat Tractor Limited (MGTL).

Mahindra group's FES is amongst the top 3 tractor brands in the world.

It holds the distinction of being the first tractor company globally to win the Deming Application Prize in 2003.

Won the Japan Quality Medal in 2007 Domestic market share of FES is around 42% (Mahindra

brand: 30% and Swaraj brand: 12%)

DOMESTIC OPERATIONS

FES is the no. 1 tractor brand in India, since 1983. Brand Mahindra sells a range of tractors that include

Bhoomiputra  (range of 25 – 45 HP) Shaan (25 HP tractor) Sarpanch (range of 30 – 50 HP) Arjun Ultra-1, with each (except Shaan) having range of

variants based on the horse power (hp) and other attributes. Mahindra tractors are known for high fuel efficiency and

reliability. FES sells its 15 HP to 75 HP category tractors in the domestic

market.

Mahindra Swaraj

Focus on generating economic prosperity for stakeholders, while growing harmoniously with the community and environment.

Swaraj today is a Rs 1600 crore company with employee headcount of more than 2500.

Nearly 6, 00,000 Swaraj tractors are operating in the field. 600 dealers spanning across India Swaraj Group has achieved ISO 14001:2004 & OHSAS

18001:2007 Certification and TS 16949 certification for Swaraj Automotives Ltd.

Mahindra is one of Indian companies to receive an A+ GRI checked rating for its first Sustainability Report for the year 2007-08 and second in 2008 – 2009.

Mahindra & Mahindra to explore the below 30 horsepower (hp) market which are apt for small farms around 1 to 2 acre.

MAHINDRA PLANS ULTRA LOW-COST RURAL TRACTOR

“Our idea is to provide low-cost farming solutions to farmers. The proposed model will be small but will do the primary function of tilling land,” said Mr Ashok Sharma, Senior Vice-President, Farm Equipment Sector, Mahindra & Mahindra.

The tractor that would cost around Rs 2 lakh and meet all the basic standards.

Targets small holding farmers who still use bullock carts to till the land.

M & M JOINT VENTURE’S

MCTCL is a 80:20 joint venture between M&M and China’s Jiangling Motors Company having range of 18 - 35 hp tractors.

M&M also has a joint venture with Jiangsu Yueda Yancheng Tractor Manufacturing Company Limited called Mahindra Yueda Yancheng Tractor Company in 16-125 hp range.

Mahindra & Mahindra had acquired a majority stake in Punjab Tractors Limited (PTL) in early 2007.

Total tractor sales in Jan 2010 is 16879 units, as compared to 9759 units in Jan 2009, an increase of 73%.

Mahindra & Mahindra and Mitsubishi Agricultural Machinery tie-up to deliver

FarmTech prosperity

New vision of delivering prosperity to farmers across rural India by providing innovative crop specific farm technologies aimed at enhancing productivity, known as 'FarmTech Prosperity'.

“Mahindra AppliTrac” Part of M&M's Farm Equipment Sector, the business focuses on the complete value chain of farm mechanization starting with land preparation to post harvest solutions.

MAHINDRA KISAN MITRA

A Mahindra Initiative :- Farmers can check daily mandi prices, read weather

updates, latest crop advisories, and agri related news. Also provides information under various other sections such as crop information, loans, insurance, mandi database, cold storages/warehouses and agri events.

Samriddhi Centre The company has repositioned all its dealerships as Mahindra

Samriddhi centres. In August 2008, the first Samriddhi Centre in Gujarat was

inaugurated in Jamnagar. At present, there are a total of 30 Samriddhi Centres across India.

Besides selling tractors and farming implements, these centres will also present relevant information to farmers to keep them abreast of world-class solutions.

The Samriddhi Centres offer farmers a wide range of agri-related services under one roof. These include insurance products, sales and service of tractors and implements, productivity demo farms, soil and water testing facilities, knowledge updates on the weather, crops, eradication of pests and diseases, mandi prices, etc.

Each Samriddhi Centre identifies 25 farmers in the region where it is located, after taking into account the farmer’s productivity in the last Rabi season. The 25 selected farmers become members of the Mahindra Samriddhi Club, which entitles them to a discount of 10 per cent on all spares purchased from any of the Mahindra Samriddhi Centres.

MAHINDRA SAMRIDDHI SAMMAN

First ever Kisan No. 1 - Mahindra Samriddhi Samman in Jamnagar, Gujarat on may 2009.

A pioneering customer centric initiative for the farming community.

The event seeks to felicitate farmers who work together with Mahindra’s Samriddhi centers to achieve an increase in productivity through the use of innovative farming technologies.

Over 1,000 farmers attended the function. The Kisan No. 1 - Mahindra Samriddhi Samman will initially be held at 10 Samriddhi Centres all across India.

MAHINDRA POWEREL

Mahindra & Mahindra Ltd. entered the field of Power Generation in F-02.

Today, the engines under the brand name Mahindra Powerol are powering Diesel Generating sets from rating 5kVA to 320 kVA.

Mahindra provides the gen sets to rural and urban India which helps providing electricity to rural people in their agri business.

MAHINDRA OFFERS LAPTOPS TO TRACTOR BUYERS

With the changing demographics of the Indian population, such initiatives are essential to ensure that India builds a technologically progressive youth populace.”

My Computer, My Mahindra, My World, they endeavour to spread knowledge and awareness in the rural pockets of the country.

This initiative addresses the desire of a better life with more choices and more information with convenience among the rural population.”

MAHINDRA TRACTORS’ SUPER TURBO CAMPAIGN 

The Toofan Carnival promotional campaign launched in Feb 04 was designed to launch the 595DI Super Turbo – India’s first Turbo Tractor and brought to vivid life the brand promise of ‘Ho Jaao Toofan Pe Savar.’

Campaign was conducted across 1000 villages in 100 districts and contacted over 3 lakh farmers.

Build excitement around the brand launch, depict power and provide an innovative ‘touch and try’ experience for the rural consumer. 

CSR Activities Mahindra &Mahindra’s FES celebrated the first anniversary in

2008 of its mobile dispensary at Kandivali, treated 14,023 patients from areas such as Damu Nagar, Hanuman Nagar and Kranti Nagar colonies in Kandivali East, Mumbai.

FES announced the addition of additional facilities to the Mobile Dispensary, including ECG, Blood Check-up and Eye Check-up tests.

Commitment of Mahindra employees towards building a healthy Mumbai. 

Employee Social Options Program (ESOPs), which is a program for Mahindra employees to collectively donate thousands of human hours for various social projects.   

TRACTOR AND FARM EQUIPMENT LTD.

TRACTOR AND FARM EQUIPMENT LTD.

TAFE is a US$750 million tractor major incorporated in 1960 at Chennai in India, in collaboration with Massey Ferguson (now owned by AGCO corporation, USA).

Tafe buys Eicher's tractor, engine, gear businesses for Rs 310 crore in may 2005.

It’s engine plant at Alwar and transmissions plant at Parwanoo through a wholly owned subsidiary “TAFE Motors and Tractors Limited.

TRACTOR AND FARM EQUIPMENT LTD.

TAFE comes under top five tractor manufacturers in the world.

TAFE is also involved in making diesel engines, gears, panel instruments, engineering plastics, hydraulic pumps, plantations and passenger car distribution through other divisions and wholly owned subsidiaries.

SUBSIDIARIES OF TAFE TAFE Motors and Tractors Limited has, apart from the tractor

manufacturing also deals in a range of air cooled and water cooled diesel engines up to 80 HP with plans are on to increase the product range up to 125 KVA and produces a range of transmission components.

TAFE Access Limited is a wholly owned subsidiary of TAFE involved in the manufacture and marketing of farm implements, trailers and accessories, distribution of passenger cars, manufacture of hydraulic pumps and panel instruments to discerning customers both in India and overseas.

TAFE’s Engineering Plastics Division produces a range of components for the consumer electronics, IT, white goods and automotive sector and have the distinction of being awarded Toyota Quality Award.

TAFE’s Power Source Division produces a range of automotive batteries for both 2-wheeler and 4-wheeler applications for sale through AMCO Batteries Ltd. As well as for sale directly through a dedicated distribution channel under the brand name of “Speed”.

SOME FACTS OF TAFE’S

One out of every four tractors used in India is made by TAFE and for more than four decades TAFE's tractors have been the farmer's first choice due to excellent quality, competitive rates and great after sales services.

Annual revenue of 6500 crores approximately. and a sales volume of over 80,000 tractors annually.

TAFE is certified by both ISO 9001 and ISO 14001. TAFE, first tractor company to be recognized for strong

commitment to excel at (Confederation of Indian Industry ) CII -EXIM Bank Award for Excellence.

TAFE’S MODELS

The TAFE brand is known for its application based and innovative range.

TAFE’s models are:- 30 hp TAFE 2750 KUBER 30 hp TAFE 30 DI HD 30 hp TAFE 30 DI ORCHARD PLUS 44 hp TAFE MAHASAMRAT 60 hp TAFE GAJRAJ G4

MODELS ARE EXPORTED BY TAFE

 TAFE 42 DI 2WD   TAFE 45 DI 2WD   TAFE 45 DI 4WD   TAFE 24 DI 2WD   TAFE 5450 2WD TAFE 5900 2WD   TAFE 7502 2WD   TAFE 7502 4WD TAFE 8502 2WD   TAFE 8502 4WD

TAFE – CUSTOMER CARE

Parts support Service support J farm Product training

PARTS SUPPORT

Across India network of more than 800 dealers and authorized parts stockists and 122 part stockists provide genuine tractor parts under the Parts Support System.

SERVICE SUPPORT

An expert team of professionals ceaselessly coordinates with dealers and authorized service centers in order to ensure zero-breakdown.

To offer immediate technical support, toll free call centers are established across the nation.

To meet emerging needs and improving features of the tractors, TAFE also monitor tractors in the field and that’s an edge under our Service Support System.

In order to ensure service at customer's door steps, a system of mobile service personnel to reach customers at their site is in place.

J FARM

In the agriculture research area, TAFE has been establishing its own adaptive research facility at J Farm which near to Chennai. This 500 acre farm has built a national and international reputation for adaptive research in various crops such as paddy, vegetable and mango cultivated under marginal rain fed areas.

It serves as an extension service to farmers advising them on appropriate and cost effective agricultural practices through media releases and through the closed community portal jfarmindia.com which covers about 82 different crops grown in the Indian sub continent.

PRODUCT TRAINING vision of TAFE’s late founder chairman :-

If you plan for one year, plant rice;If you plan for ten years, plant trees’If you plan for a hundred years, educate people.

Service staff will play key role in educating farmers on the farm mechanization and economical use of the tractors to increase the agriculture production.

Dealers and company personnel go through a rigorous training programme.

An online help desk is also administered by the centre called the ‘Technowledgy Desk’. This desk provides solutions to any of the territory staff for their technical problems faced in their day to day experience in the field. A panel of experts has been formed to consider the problems and provide advice on the matter relating to tractor applications, use of implement, issues related to agriculture and its mechanization etc.

TAFE – SOCIAL CONCERN

TAFE has worked towards impacting society through partnering development efforts. It is involved in the areas of education and health care through the Amalgamations group charities.

Eco friendly products & plants TAFE’s products are engineered to more than meet emission

standards. Its plants are lush bases of greenery that are nurtured with sensitivity

and care. All its plants practice rain water harvesting to ensure water table

rejuvenation. Chennai plant is a bird sanctuary that attracts many varieties of

migrant birds. TAFE is certified under ISO 14001 for its environment management

systems.

TAFE – SOCIAL CONCERN

Projects TAFE partners institutions offering treatment, support and

care to people suffering from terminal illnesses such as cancer. It has been and will continue to be at the forefront of support

at times of natural calamities. It also supports schools near its plants by infrastructural

inputs.

J. Rehab Centre TAFE empowers orthopedically challenged women living in

and around Madurai through its J-Rehab centre, to be financially independent and respected members of society, which would have otherwise considered them as liabilities. It provides these women a conducive surrounding to work in and all the special facilities they need.

REVENUE CHART OF PAST FIVE YEARS (2003-04) - (2007-08)

STRATEGIC OPTIONS AVAILABLE FOR TAFE

Joint Ventures, Acquiring Firms in India and Abroad

The tractor industry is in a mature phase today. Hence, there arises a need to grow through inorganic means. With M&M acquiring Punjab Tractors and TAFE acquiring Eicher, the total number of players in the Tractors market in India has decreased considerably. Hence, reduce competition & maintain decent operating margins.

Acquisitions abroad would help in reducing the dependence on the monsoons as well as the domestic market.

Also, joint ventures with or acquisitions of foreign players shall provide access to their Research & Development facilities which would help in offering better quality products in the domestic market as well as improve reach in overseas markets.

STRATEGIC OPTIONS AVAILABLE FOR TAFE

Improving Presence in Large Size (>40 HP) Tractor Segment

The large HP segment (>40 HP) is expected to grow at a much faster pace as compared to the other segments.

TAFE being a very small player in the high margin large size tractor segment needs to improve its presence so as to improve its overall profit margins and presence across all segments in the tractor industry.

STRATEGIC OPTIONS AVAILABLE FOR TAFE

Improving Regional Presence in Western and Southern India

The major chunk of growth is expected to come from under penetrated states of Western and Southern India.

TAFE needs to make a strategy to successfully capture a major part of the tractor sales in these regions.

Currently, it lags behind the market leader, M&M in these regions by a substantial margin. Hence, the challenge for TAFE is to successfully bridge this gap through its diversified product offerings and vast distribution network.

STRATEGIC OPTIONS AVAILABLE FOR TAFE

Optimizing Dealer Networks A larger dealer-network than necessary underlines the

need for TAFE to optimize its dealership network and reallocate dealers as per customer density.

STRATEGIC OPTIONS AVAILABLE FOR TAFE

Tapping the Market to Raise Funds Debt/Equity ratio for TAFE is 0.22, much lower than the

other listed players in the Industry. This gives TAFE sufficient scope to raise funds from the market to be utilized for funding its acquisition plans, entering the high HP segment as well as focusing more on export markets.

The funds raised can also be utilized to fuel its diversification plans into farm related agricultural implements and emerging areas such as Airports, Hotels, Golf courses, etc.

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