Mahindra & Mahindra's Farm Equipment Sector, which exports tractors to 25 countries worldwide, is looking at Africa in a big way. The market here is expected to grow to one lakh tractors annually in the medium term.
Though M&M's overall tractor exports fell 19% to 7,013 units last fiscal, Africa with 1,600 units was the silver lining in the worldwide dark cloud. "Our success story has been Africa which has seen a 10-fold increase in tractors between 2005 and 2009," said Anjani Kumar Choudhari, president, of the Farm Equipment Sector.
There has also been a proliferation of tractor assembly plants in Africa lately. While Ghana, Nigeria, Namibia and Gambia already have facilities in place, new assembly units are coming on in Angola and Chad.
Sources say that some of these countries have also sought lines of credit from the government of India. In addition, the local government also supports this initiative largely because it contributes to the agriculture sector as well as providing employment opportunities for the locals.
"We export semi-knocked down units which are then assembled in African plants. Recently, we got an order of 800 units from Angola," said Choudhari.
He says there is a good potential to grow business in this part of the world. "It is something we are looking at as a long-term strategy. Right now, the total tractor market there is roughly 20,000 units."
Choudhari said that Africa was also richly endowed with natural resources (Zimbabwe and South Africa, for instance, have huge agriculture produce) and the market was, therefore, "bound to grow."
While Africa looks promising, M&M is also focusing on China where it has 2 joint ventures. Plans are under way to sell at least 35,000 units this calendar year there. Exports to the U.S. were down 20% last fiscal to a little over 4,000 units largely due to the recession.