M&M outlines new roadmap for auto, farm verticals

Murali Gopalan | Updated on July 02, 2020 Published on July 02, 2020

Rajesh Jejurikar

Walk, run, fly will be the credo for its SUVs and tractors, says Rajesh Jejurikar, Executive Director

Rajesh Jejurikar is clearly upbeat about his company’s tractor numbers which came in on Wednesday.

“We have had a very good run on tractors,” says Mahindra & Mahindra’s Executive Director, Auto & Farm Sectors, in a telephone interview. This is especially welcome in the backdrop of Covid-19 where rural India has been the exception to the doom and gloom and is actually firing on all cylinders, evident from M&M’s tractor sales which are its second highest ever for June.

Tractor capacity has been completely “maxed out” and is now nearing 95 per cent. “We expect the brisk run in demand from rural to continue. Reservoir levels are encouraging and, as of now, we expect good rains…all the signs are positive,” adds Jejurikar.

With the Centre also doing its bit to boost the rural economy through a series of farm-related reforms, there is every reason to believe that the good times are here to stay. Additionally, M&M has been pulling out all the stops to ensure that its farming community is well taken care of.

It is in this context that the company’s latest initiative, Krish-e becomes significant as a solutions provider which goes beyond just selling tractors. “We believe that with most categories evolving from products to solutions, so would ours in the farm equipment sector. If we really want to stay ahead of the curve, we have to go out and offer meaningful technology-led solutions to our customers,” elaborates Jejurikar.

This would involve selling, what one may term, an embedded product since it is a product plus a proposition for an outcome around it. “It means we can play a role in shaping what kind of productivity and yield you will get. We are just not here to sell you a machine and disappear,” he adds.

From M&M’s point of view, the key is to change the nature of engagement which lies in creating a partnership with its customer. This is the reason why it has used the analogy of a moat for the Krish-e drive.

In a way, this is a further evolution from its samriddhi centre concept which will now become part of the Krish-e umbrella. These will be brought into dealerships for both M&M and and its other tractor brand, Swaraj. Effectively, the Krish-e centre strives to offer farmers advice by actually demonstrating on a demo plot the impact “we can create” on solutions to help them in productivity. It will also include counsel on soil testing, cropping pattern and the like.

“We are betting big on it as a key strategic driver of our business even while being aware of the challenges involved in executing something like this,” says Jejurikar. Tractors and machines is only one part of the process and the advisory through Krish-e extends to areas like paddy or sugar growth potential, optimisation of potato crops and so on.

It fits in with M&M’s focus on precision farming and digitalisation where advanced imaging, algorithm creation and high end data analytics are part of the picture. As Jejuirkar says, initiatives like Krish-e are aimed at helping transform the lives of small landholding farmers.

To put this in perspective, India’s food requirements in 2030 could be an area of concern considering that most of its arable land has already been cultivated. “A lot of the growth in food needs has come out of productivity and yield…much of the work being done through Krish-e and precision farming is focused on getting more out of your existing land,” he explains.

Whilst on the subject of tractors, the other exciting project ahead for M&M is Project K2 being executed along with Mitsubishi Agricultural Machinery of Japan which it had acquired in 2015. It was following this when the company decided that it really needed a very strong lightweight platform strategy for tractors.

This would help it compete globally, even in markets like North America, while this is also an emerging segment in India. “Indian products, up until now, are basically designed to be tough, rugged and for specific use in our conditions. However as we move to more specialised applications, what you really need are lightweight platforms,” says Jejurikar.

In the process, the M&M-Mitsubishi duo is “basically creating” four tractor platforms that will go across North America, Japan, Southeast Asia and, of course, India as a primary market. A recent analyst presentation shows that 38 models have been planned from these four platforms extending from 13hp to 70 hp.

More specifically, this basket will comprise six models in the subcompact tractor segment (13-26hp), 10 in the compact category (18-35hp), 11 small utility tractors (25-40hp) and again 11 in the large utility range (41-70hp). This has been a collaborative project, in terms of defining the architecture etc, between teams from Mahindra Research Valley in Chennai in tandem with Mitsubishi, Japan.

This is only one side of the story, as Jejurikar points out, with “multiple other things happening” with a host of other allies across the world. Even with Mitsubishi, for instance, there is work happening on rice transplanters and rice harvesters for India.

Likewise, other M&M acquisitions like Sampo Rosenlew of Finland (in 2018) and group company, Swaraj, are teaming up on combined harvesters while there is work happening on common aggregate strategy between Turkey’s Erkunt Traktor (acquired in 2017) and India. “There are many such joint programmes on,” he adds.

Jejurikar is also keen on getting the tractor and auto teams to work at a much more collaborative level. “Having spent time at auto before going into tractors, I have learnt that the depth of knowledge that our tractor teams have on each village, tehsil and so on is very deep,” he says.

The auto teams, in contrast, can “never have that level of depth of knowledge” which is perfectly understandable given the markets they are focused on. Yet, there is more reason for them to come together, more so when rural India is clearly leading the fray right now.

M&M has now established a mechanism where its auto and tractor teams at the regional offices touch base with each other every week. They pick up inputs on areas/geographies in their regions to focus on for better direction. “Clearly, there is an opportunity emanating from our expertise in tractors,” says Jejurikar.

On the auto side, where the company has its SUVs and pickups, the key is to bring greater differentiation and focus on the core of its brand DNA. We want to play to that core,” he reiterates. As part of this plan, the new Thar will be launched in the second half of the year, October in all likelihood, with two launches following in early 2021 and the following fiscal.

“All this will drive our brand differentiation in our core and we want to play that game well,” says Jejurikar. It is also part of a new mantra called ‘walk, run, fly’ which was evolved in the context of Covid-19 and extends to both the auto and farm sector businesses.

“You can either use the uncertainty (caused by the pandemic) to get into panic mode or tell yourselves that there are things you must do to manage the short-term well. However, that should not take away your hopes, aspirations and strategies for the longterm,” he explains.

It was with this in mind that the timeframes of ‘walk, run, fly’ were formed with the last clearly scheduled to happen next fiscal when the worst of Covid-19 will be hopefully behind India and the world.

As Jejuirkar says, the ‘walk’ phase was about working on scenario planning for the year and how best one could protect oneself in these times. “A series of actions has been taken to manage our cash situation an optimising capital spending without taking away anything strategic,” he says.

‘Walk, run, fly’ is also, in his words, a philosophy of how M&M is thinking in this current period. For instance, different verticals will be at different stages of how quickly they move from walk to run. It is quite evident that the farm equipment space has moved much faster thanks to rural demand picking and is now literally into a run.

“Eventually, Covid-19 will move on and we need to use this time to prepare ourselves well for next year. We must make sure that while we are managing the short-term (and the crisis that comes about), we are well prepared for all the strategies going forward,” says Jejurikar.

The pandemic has been a huge challenge for automakers especially when it concerns their supply chains. Definition of containment zones coupled with lockdowns happening across States has only made the exercise more complicated when it comes to sourcing components.

Has the time come, therefore, for some kind of a de-risk strategy going forward? According to Jejurikar, this option is not always viable because “you are then doubling your tooling investment” or the supplier concerned does not get the full capacity that they would and costs would escalate in the process.

In some cases, it is a win-win situation for both the automaker and supplier but not so all the time which means “you may decide to live with some risks”. These are always tradeoffs on a specific situation, he adds. What is clear, however, is that the pandemic is going to “wake us up into believing that there is more uncertainty than we could have ever imagined”.

As Jejurikar says, a disruption of this scale and magnitude is a first-of-its-kind in today’s modern era. “Clearly, everybody is going to relook at various aspects of their business models. We also have to think about what exactly de-risking is…based on scale and also how to do it,” he adds.

Yet, some positive lessons have also been gleaned during Covid-19 especially in the digital space where conferences, dealer/supplier meets etc are all being done online. “We should stay with it and leverage the learnings since it will make cities more liveable. This is our opportunity to clean up all the mess we have made as a human race,” declares Jejurikar.

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Published on July 02, 2020
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