Mahindra War Room 2015

Tractors & Farm Equipment Caselet

MAHINDRA AUTOMOTIVE & FARM SECTORS:

TRACTORS & FARM EQUIPMENT - DIGITIZING THE TRACTOR ECOSYSTEM
Mahindra Automotive & Farm Equipment Sectors (AFS) comprise businesses ranging
from Automotive (including Cars, UVs, Small Commercial Vehicles, Trucks and Buses),
Agri-business (including Dairy, Seeds and Applitrac equipments), Construction
Equipment, Powertrains (Engines, Transmissions & Gensets) to Tractors. This caselet
pertains to the Tractors & Farm Equipment Business of Mahindra AFS.
BUSINESS BACKGROUND
Mahindra began manufacturing tractors in 1963, through a joint-venture with
International Harvester of USA, which had a strong DNA of Tractor Manufacturing and
Voltas Limited. The Mumbai plant was commissioned and the first tractors rolled out in
1965. Since then, the company expanded steadily, championing farm mechanization in
India. Historically, Mahindra and Eicher Tractors were strong in wheat growing fields of
the North, while TAFE was strong in the rice growing fields of the South of India. TAFE
made an aggressive entry into the Northern market, by acquiring Eicher Tractors and
increasing its market share to 22%, coming within striking distance of Mahindras 31%
then. The acquisition gave TAFE an entry into the northern markets of Punjab, UP and
Himachal Pradesh, which account for a third of all tractor sales. Mahindra responded by
acquiring Punjab Tractors, renowned for its Swaraj brand of tractors, in 2007, and
executed a near perfect integration, thereby retaining its long-held leadership position.
In 1994, Mahindra entered the American market, and since then its tractors have been
sold and serviced by hundreds of tractor dealers throughout USA. Mahindra has
34assembly plants in USA, in Houston, California, Tennessee and Pennsylvania. In
2004, Mahindra entered the Chinese market by purchasing an 80% stake in Jiangling
Tractors of China, and subsequently formed a joint venture with Yeuda Group in China.
In 2005, Mahindra entered the Australia & New Zealand markets. In addition to these
markets, Mahindra Tractors are sold today in Africa (Nigeria, Mali, Chad, Gambia,
Angola, Sudan, Ghana, Morocco), Latin America (Chile, Argentina, Brazil, Venezuela,
Central America and the Caribbean), South Asia (Sri Lanka, Bangladesh, Nepal), the
Middle East (Iran, Syria) and Eastern Europe (Serbia, Turkey, Macedonia).
With the steady entry in world markets and successful inorganic growth thrusts,
Mahindra became the #1 Tractor Company in the World by Sales Volume, with an
annual sales of over 225,000 units and a cumulative total of 2.3 Million Tractors sold to
date.

Broadvision Perspectives Client Confidential

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Mahindra War Room 2015

Tractors & Farm Equipment Caselet

LIVE CHALLENGE: DIGITIZING THE TRACTOR ECO-SYSTEM

In the late 2000s, Mahindra reinvented its vision for the Farm Sector from going beyond
just selling tractors and farm equipment to farmers, to delivering farm-tech prosperity
- that is, doing all it takes to make its farmer-customers in more than 40 countries
prosperous.
Mahindras Tractor brands, ranging from the 15 HP engine to 85 HP, have been
designed in close communication with farmers about their day to day tractor usage and
farming practices, and range from low cost tractors that cater to farmers with marginal
landholdings, to higher performance tractors with superior features.
The rapid growth of internet penetration, cellphone network coverage and low-cost
smartphones in just a span of 5 years has opened up infinite possibilities for the tractor
eco-system. Traditionally, the Indian farmer has been using the least amount of
mechanical and technological tools in farming, compared to his or her counterparts in
the developed markets. But all this is changing, and is expected to change radically
over the coming years.
With the advent of the Digital Era, how will the Tractor Eco-system shape up in
the coming 5-10 years? What are the avenues where the growth of Digital
Technology will impact in the Tractor business? What does Digitizing a tractor
mean actually - what can be done with digitizing the tractor that is not done today
in the mechanical world of tractors? What are the opportunities to digitize
within the tractor itself? For example, what can be put into the tractor by which it is
more of a digitized machine, a connected tractor - something that has a future like
that of connected cars. What can be got from connected tractors that cannot be got
today? For example, can all connected tractors in a district talk to each other
meaningfully, that will result in making the tractor more productive and efficient? And
what are the opportunities to digitize around the tractor. For example, Suppose
through digital technology we remote sense the soil conditions using a back-office,
process the data, and feed the information back to the farmer - this is Digitizing around
the tractor, as it has nothing to do with the tractor itself, but gives the farmer an input of
how he should be using the tractor, such as when is the right time to go and plough the
field, how much pressure to put in the soil etc.
Evolve a strategy for Mahindra to digitize the tractor eco-system.

Broadvision Perspectives Client Confidential

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