M&M may soon be world’s No. 1 tractor co

[B. Karthick]

Mahindra and Mahindra (M&M) will end this fiscal year as the world’s
number one tractor company by volumes, a company official said. “If we
take the volumes of one legal company — not all subsidiaries or
international operations — we might well be number one this year,”
said Anjanikumar Choudhari, president of the farm equipment division
at the automobiles-to-finance-to-IT conglomerate.

M&M and subsidiary Swaraj (earlier Punjab Tractors) are expected to
sell about 1.5 lakh tractors this year, while the mother entity of the
world’s largest tractor maker John Deere sells around 1.1 lakh units a
year.

The only factor that can upset M&M’s drive to the top this year is the
impact of a poor monsoon. “A great deal depends on how sentiment
evolves over the next few months post-monsoon period,” Mr Choudhari
said.

He, however, claimed that the poor monsoon scenario has already been
factored in and that the target was within reach for the company that
sold 63,000 units in the first five months of the fiscal.M&M sold 1.13
lakh units last year, including eight months of sales of Swaraj, more
than a third of the country’s total sales of 3.03 lakh units.

Even without the “single legal entity” disclaimer, M&M is within
sniffing distance of John Deere in global sales, a partner in a Delhi-
based auto consultancy firm said.

M&M’s Chinese ventures are expected to sell 30,000 units, taking its
worldwide tally to 1,80,000. John Deere’s global combined sales are
around 200,000 units annually, said the person requesting anonymity.

According to Mr Choudhari, the company has increased its marketshare
in India to 42-43% from 35% earlier after successfully turning around
Punjab Tractors (now Swaraj) that it acquired two-and-half years ago.
M&M has spent a total of Rs 1,400 crore (including the deal price) on
Swaraj and has recovered 50% of that already, he said.

The turnaround strategy included reducing dealer stocks, improved
efficiencies at the plants, increased productivity per man at its
Mohali factory by more than 42%, rationalising staff and rolling out
new products.

Dealer stocks are down from around six months (about 12,000 tractors)
to less than a month, Mr Choudhari said. Dealer outstandings are down
to 17-18 days and the synergy in purchasing components and materials
is already saving Rs 3,500 per tractor, he said. “This year, on a
cumulative basis, that saving will exceed Rs 4,000.”

Mr Chaudhari said he expects M&M to clock more than the industry trot
of around 5-8% growth this fiscal despite the drought in several parts
of the country as it takes the top spot in the global pecking order.