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FARM EQUIPMENT SECTOR

Rann Neeti
Rohit Kumar Sharma – 95(rohit_d12@iift.ac.in)
Vivek Nadiminti – 106(vivekn_d12@iift.ac.in)
Apoorv Gogar – 113(apoorvg_d12@iift.ac.in
Nikhil Sabharwal – 132(nikhils_d12@iift.ac.in)
Contents
• Challenges
• Tractor industry trends
• Current market scenario and factors affecting sales
Tractor • Strategies to improve market share
Industry

• Grapes export trends


• Potential markets for exports
Fruits and • Potential markets for other fruits and vegetables
Seeds • Fruits business strategies

• Telecom tower scenario


• Tapping cold storage market
• Rural electrification
Powerol
• Solar solutions

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Challenges
Fruits and
seeds business
revenue `100
cr Tractor
Powerol
business
revenue `5000 revenue –
cr by 2015
`15,000 cr

`20,000
cr by
2014

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FES industry trends (global)
140000

123000
120000

100000
in million USD
88800

80000
70200

60000
52710

40000

20000

0
2000 2005 2010 2014

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FES sectoral breakup (global)

Parts & Attachements, 17%


Tractors, 29%
Tractors
Harvesters
Planting,Seeding,Fertilizing Machinery
Haying Machinery
Other Equipments, 20% Ploughing & Cultivating Machinery
Other Equipments
Parts & Attachements

Harvesters, 17%

Haying
Machinery,
Ploughing & Cultivating
6%
Machinery, 5%
Seeding,Fertilizing Machinery,
6%

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FES growth (continent-wise)

30000

25000

20000 2000
2005
2010
15000

10000

5000

0
North America Western Europe Asia/Pacific Latin America Eastern Europe Africa/Mid East

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Region wise Market Position

North America South America ASEAN Mid-East Europe

• Mahindra • John Deer • Mahindra • Mahindra • John Deer


• John Deer • CNH • AGCO • AGCO • AGCO
• AGCO • AGCO • CNH
• CNH • CLAAS
• CLAAS

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Tractor Industry Analysis
Better & Cost effective Products by POTENTIAL
MNC’s & Local Players catering to ENTRANTS
mass and niche segments alike
Education & Information
access leading to customer
Threat of entry
demanding more options
and VFM products

Bargaining power Bargaining


of suppliers INDUSTRY power of
COMPETITORS buyers
SUPPLIERS BUYERS
Rivalry among
Existing Firms
Demand of customized
Products like with
Threat of Substitute advanced features across all
Products or Services HP segments
• Without Hydraulic
Heavy & efficient SUBSTITUTES
Machinery for Non • Power steering
Agriculture Operations
• Synchromesh Gear
Team Rann Neeti, IIFT Box etc.
Tractor industry trends (domestic
and M&M)
Industry MnM
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

Year

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Trend in statewise tractor sales
100%
 Matured Market: High
90%
penetration, low potential of 33.5
36.1
fresh demand other than 80%
45.4 44.5
39.6

replacement market ( Punjab, 70%

7.1
UP, Haryana) 60%
6.9
6.6
6.2 7.2
5 5.7 4.6
50%
 Emerging Market: Largely 3.4
5.8
3.4
7.7
8.5
7.3 8.5

40% 7.5 7.9


dependent on rainfall for 9.5
9.8
8.5
8.3
30% 9.6
irrigation and major drivers 8.1 5.2
7.2
8.5
20% 11.2
would be irrigation plan in 7.7 10.1 12.7

10%
these areas ( Rajasthan, AP, 15 13.7 12.1 15.5
18.9

0%
Bihar, Gujarat) 2005-06 2006-07 2007-08 2008-09 2009-10

UP AP MP Raj MS Bih Har Others

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Tractor market

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Tractor segments

Tractor

Medium
Small Tractors Large Tractors
Tractors

<30HP 30-40HP 40-50hp >50hp (


(Punjab, (Southern and turnkey and
Haryana and (Richer infra projects)
Western region) farmers) 25%
UP)15% 48% 12%

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Growth indicators for Indian FES
 Land holdings are becoming smaller
 Multiple cropping and contract farming practices increasing
 Increased mechanization due to decrease of farm labour
 Increased buying power of farmers in the form of higher minimum
support prices, and the easy accessibility of credit to the farmers
due to supportive government policies (like limits Kisan Credit
Card being increased)
 Increased irrigation area under Five year plans 2007-2012
 Rising labor costs

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Factors affecting tractor sales
Govt. Policies: Manufacturer:
 Credit Outlay  Product Range
 Kisan Credit Cards  Customized product
 MSP of major crops  Provide the products like
 Irrigation (to improve by 16 Reconditioned engines and
MHA in 11th five yr. plan) AMC to increase product life
 Rural Infrastructure cycle and hence maintaining
relation with customer even
 Loan waiver
after expiry of warranty.
 Tax Proposals (0% excise
 To provide implements and
duty on tractors)
attachments under same roof
 NREGA (improved income
with Financing and warranty.
from non-farm activities)

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Tractor demand forecast
 Tractor Population: Highly
Dependent on Irrigation
facilities
 Direct correlation ( with
R²=0.87) with area under
irrigation.
 Tractor population is
estimated at 50 lacs in 2014-
15.
 Projected sales in 2014-15 is
5,40,000 units.

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Strategy for Yuvraj
Manufacturing units  To strengthen the sales of
 Satellite plants (to Yuvraj in Hotels, golf and
assemble tractor from airport industry.
CKD units)  Yuvraj to be sold along
 Plants to be installed in with AMC by which
partnership with small customer need not spend
tractor players or farm anything on tractor for first
equipment players (eg.
year and the same would be
Deepak Diesels pvt. Ltd.)
financed along with the
vehicle

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Strategies to improve Market share

 Refurbish tractors - Marginal farmers


(WB,UP,Bihar,AP,TN)
 Yuvraj - Small Farmers (AP,CG,MP,MH)
 Initially tractors to be sold in bundle with AMC
 Improve product portfolio for 25-30HP range
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Export Markets to focus

Mid-East &
North America Latin America East-Europe
Africa
• US • Brazil • Russia • Turkey
• Canada • Argentina • Poland • South Africa
• Mexico • Chile • Ethiopia
• Peru • Ghana
• Venezuela • Senegal
• Uganda

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M & M Export Performance (Tractors)

12000
11283

10000
6.3 % CAGR 8837
8533
(F03- F10)
8000 7525
6981 6933

6000 5746
5385 No. of Units Sold
4769

4000

2000

0
F03 F04 F05 F06 F07 F08 F09 F10 F14 (expected)

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Strengthening of sales of Applitrac
 Sales of Applitrac to be improved by
 Focusing on area of large landholdings of farmers
 Providing complete AMC of the Applitrac
 Providing of complete AMC of farm solution (Samriddhi +
Applitrac)
 Providing Customized product to customer

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Revenue through after sales
activities
 Currently Revenue through spare parts
` 100 crs (approx)
 Current Market Potential for spare
parts is ` 700-800 crs (approx.)
 Refurbish and reconditioned aggregates
( Engine, Gear Box, Implements and
attachments)
 AMC to be started by MNM (However
the same is initiated at the Dealer’s
end):
 Only Labour
 Only Labour and discount on parts
 Only Labour, parts and lubricants
 Of complete agriculture implements
(including tractors, implements and
attachments)

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Grapes exports trend
Value Quantity

 Exports (by value ) 117492

CAGR10% 108554

 Exports (by quantity) 90640

CAGR 16% 75842

 By 2015 ` 1000 cr 64530


68329
60056

 2% market share - ` 20 52436 53368

43351
cr

2005 2006 2007 2008 2009


Source: trademap.org

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Grapes(sources & destinations)

• China and Russia’s grapes


import bill ` 2790 cr
• Potential countries –
Saudi Arabia, Philippines,
Source: trademap.org
Singapore & Kuwait
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Mangoes(sources & destination)

• Market size of exports to


Bangladesh, Japan, UAE and
Kuwait will be approximately
from India `550cr by 2015
•A market share of 3% `16cr
revenue
Source: trademap.org

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Banana

• Exports to Middle East and


neighboring countries such as Nepal and
Bangladesh will be at `250 cr
• A 5% market share would translate to
` 12 cr
Source: trademap.org

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Apples

• Exports to Bangladesh
and Nepal - ` 60 cr
• 5% market share – ` 3 cr
•Other potential markets –
Middle east, Japan, China
Source: trademap.org and Singapore
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Flowers

Source: trademap.org

• Flowers export - ` 180 cr


• 1% market share - ` 18 cr
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Vegetables

1% market of
potatoes, onions and
tomatoes - ` 30 cr

Source: trademap.org

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Processed fruits
 Banana- banana wafers,
banana figs, banana pulp,
banana juice and banana
flour/powder
 Mango – mango pulp exports
valued at ` 400 cr
 Grapes – grapes juice, wine
makers

Source: APEDA

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Fruits business strategies

 Complete solutions in all 4


dimensions
 Strengthening the cold chain
– Powerol?
 Collaboration with players
such as PepsiCo & HUL –
Farmer Service
Centers(FSCs)
 Bring advanced technologies
in post-harvest management

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Powerol performance

180000
167000
162000
160000 153000

140000 134600

120000

100000

80000

60000 52000
48011

40000 31922
24141
20000

0
F07 F08 F09 F10

Industry Poweol

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Telecom tower scenario
 50,000 towers to be added 2015 510

every year for next 5 years 2014 489

 Rural expansion by new


and incumbent players 2013 463

 3G rollout 2012 437

 Introduction of MNP 2011 387

2010 330

2009 270

0 100 200 300 400 500 600

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Tapping cold storage market
 Supply of 21.7 million tonnes Use existing Use powerol Two-
against demand of 31 million network to build DGsets for pronged
cold storage cold storage gains
tonnes
 Investment to the tune of ` 12000
cr in next 4 years for cold chain
 Severe gap between required
capacity and installed capacity
 Annual wastage - ` 500 billion due
to improper storage
 Higher capacity utilization by
storing multiple products

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Rural electrification – the PV way

Growing primary energy One third of population have


demand no access to electricity

“The sun occupies


centre stage” – Dr
Manmohan Singh

80,000 villages not connected Coal, primary source of


to any grid. For remote areas, energy generation, set to
PV is the solution decline

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Solar solutions
Captive
Power back power
up for generation
cellular
towers

Urban
applications

Leader in PV industry

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Expanding markets

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Drivers for inverter business

Consumers
suffering
Demand for from lack of
inverters in brand
SE Asian and awareness
African and want
`900 cr countries perceived
market,70% value
unorganized benefits

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Synergy
Tech
Mahindra,
Mahindra
Satyam
offices

Mahindra
Club
Lifespaces
Mahindra
Resorts
Powerol &
Worldcity

Mahindra
Retail

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THANK YOU

Team Rann Neeti, IIFT