MUMBAI: Mahindra & Mahindra (M&M) is in talks with Japanese major Mitsubishi for a global strategic alliance to source farm equipment products including tractors as it looks to expand presence in major markets across the globe.
India's largest tractor producer plans to form joint product development teams with Mitsubishi, seeking to transform the sourcing arrangements for the US and Indian markets into a global strategic alliance. Under the planned alliance, M&M will source farm equipment products from Mitsubishi and sell them under its brand name in growing international markets.
"We are trying to cement a global relationship, identifying the right markets and products. We are looking at different possibilities and joint product development teams are being identified," said Pravin Shah, chief executive-international operations-automotive and farm equipment sectors, Mahindra & Mahindra.
Joint teams will look at developing products that suit the local market preferences, boosting the chances of easy access to finance for buyers. M&M has identified fast-growing markets such as Africa and some key countries in Europe and South and Central America to pursue alliance with the Japanese major ."In Europe, we are only there in Turkey. There is enough bandwidth for expansion," said Shah.
The company is consolidating its distribution network in places such as Tunisia, Morocco, South Africa, Kenya, Ethiopia and Zambia , beefing up presence in Africa. The automobile-to-aviation conglomerate started building longterm alliance with Mitsubishi when it had truncated its relationship with Korean company TYM in 2007. "In 2007, we truncated TYM agreement and limited it to specific products. In the last four years, more focus has been give to alliance with Mitsubishi," said Mr Shah.
The relationship got further strengthened when M&M and Mitsubishi Agriculture Machinery Company struck an agreement to transfer of agricultural machinery technology for manufacturing operations in India in 2010. The company entered the US market in 2003 and tractors upto 33hp, are sourced from Mitsubishi and branded as Mahindra. M&M has an exclusive arrangement for the US and Australian markets to sell tractors produced by Mitsubishi.
"We also have an understanding to expand the product range and have plans to launch new range of tractors with new and additional features," Mr Shah said. M&M's global tractor sales rose by 17% to 48,600 tractors for the year ending March 2011. The major markets contributing to the growth are USA, China Sri Lanka, Nepal, Bangladesh and the African continent.
Source: The Economic Times of India, April 19, 2011