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Mahindra & Mahindra Plans to Build a New Tractor Plant in Brazil

by Rishika Choudhury

Date & Time: Jul 27, 2022 10:00 PM

Read Time: 3 minute

As part of its strategic global expansion, Mahindra & Mahindra, the world's largest tractor manufacturer, plans to establish an assembly plant in Brazil, the world's sixth largest tractor market. According to Hemant Sikka, president of Mahindra & Mahindra's Farm Equipment Business, with manufacturing or assembly bases in three of the top five tractor markets, the maker of Arjun and Novo tractors sees its volumes doubling in Brazil over the next few years and is thus expanding its footprint with a local manufacturing base.

In Brazil, approximately 54,000 units are sold each year, accounting for nearly two-thirds of the market for vehicles with up to 110 horsepower, which is Mahindra & Mahindra's mainstay. In a short period of time, Mahindra has already captured approximately 5.2 percent of the market.

Hope more than double the market share

"We're doubling down on Brazil, and I'm very optimistic about our market prospects." Brazil has become a major source of food grain exports in the current global scenario, serving as the world's breadbasket. The country has a large potential for agricultural exports. "With the new assembly plant, we hope to more than double our market share," Sikka added.

In order to narrow its focus, Mahindra recently took over the sales and marketing of tractors in South Africa from its distributor. It is currently working on a plan to expand into South America and Africa. With the new generation K2 platform from Mitsubishi Agricultural Machinery and the Armatrac brand of Tractors from Erkunt - Turkey, Mahindra intends to expand its presence in Western Europe and Southeast Asia in the coming years.

To be sure, international business already accounts for one-third of the company's total revenue. Its subsidiaries in Japan and North America now generate a billion dollars in revenue. Sikka anticipates that the international business will continue to outperform, driven by new generation tractors, farm implements, and expanding global footprints.

Mahindra North America is the company's largest non-Indian hub

At the end of FY-22, Mahindra & Mahindra's global tractor sales were around 38,000 units. Mahindra North America is the company's largest non-Indian hub, selling approximately 20,000 tractors per year.

Direct exports from India will also double in the next three years, according to the president of Farm Equipment Business. However, in addition to establishing multiple nodes around the world, it is also expanding capacity in Zaheerabad and Nagpur. Mahindra wants Nagpur to be a significant export-oriented unit.

"In the next three years, we hope to double our export volume to 40,000." Aside from international expansion, additional capacity is being added in Mohali, Zaheerabad, and Nagpur," Sikka added. Mahindra will now have a total capacity of 4 lakh units in the country.

All of its international subsidiaries have become profitable and delivered returns ahead of schedule over the last seven quarters. "For the last seven quarters in a row, we have not only been profitable, but we have been significantly ahead of projections," he added.

Mahindra sell in global market

Mahindra sells approximately 3.7-3.8 lakh units (over 90% of which are sold in India) in a global market of 2.3 million, accounting for 16% of the global market share. In terms of volume, the company is the largest, led by smaller to mid-range horsepower segments ranging from 25 to 150 hp, and it does not compete in higher horsepower tractors, which are dominated by John Deere, CASE New Holland, and Kubota, among others.

Also Read: MAHINDRA CAR: आपके बजट में बिल्कुल फिट बैठेंगी महिंद्रा की ये शानदार कारें, देखें लिस्ट!

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