Mahindra & Mahindra is focusing on inorganic growth opportunities in the farm equipment space by endorsing clean and green technology.
The automaker picked up a 20 per cent stake in the Indian-arm of US-based Vayugrid Marketplace Services last week for Rs 1 crore essentially to create a business model whereby farmers can ensure better productivity and offtake, Pawan Goenka, president of automotive and farm equipment business at M&M, told FC.
Vayugrid’s core area of business is contract farming and promoting alternative energies to the rural community — helping farmers to get access to energy to drive productivity and thereby create wealth. In India, Vayugrid is headquartered in Bangalore while in Pune, it has 1,000 acres of farm and agricultural land under cultivation for farmers.
“Vayugrid has a business model that ties in very closely to what we want to do in the longer term in our farm equipment business –create opportunities and give knowledge to farmers to make them able to manage their crops much better, get better productivity, thereby guaranteeing a better offtake,” Goenka said.
Under the farm equipment segment, M&M sells tractors, diesel generator sets and engines. The firm is also engaged in contract farming through the ‘Mahindra Shubhlabh’ initiative.
“We will also be aggregating farms in the sense that many small farmers will come together and raise the crop. By the end of this year, the land under cultivation will be increased to 5,000 acres. We hope to double it in the next year,” Goenka said.
“It’s a way to get closer to potential customers and also help them increase their personal disposable incomes. Mahindra is also trying to look at its own business, which will be benefitted by such a move in the long term to spread their wings further in the tractor business,” auto practice leader PricewaterhouseCoopers’ Abdul Majeed said.
Goenka didn’t specify the future investments in Vayugrid but said, “Right now, we have invested Rs 1 crore in equity and Rs 4 crore in convertible debentures.”
“Our primary objective is to become a global SUV player and we have also said we are interested in clean, green technologies. So basically, it’s a technology play and SUV play,” Goenka said.
In terms of green technologies, M&M picked up a 55.2 per cent stake in Bangalore-based Reva Electric Car in May this year to expand in the high-growth electric vehicle business globally.
Source: My Digital FC