M&M grapples with exports deceleration

Farm equipment and utility vehicle maker Mahindra and Mahindra (M&M) has taken a beating in tractor exports with its subsidiary Mahindra USA (MUSA) recording a 17 per cent dip in its annual sales in fiscal 2004.

The decline in exports has impacted the company's total tractor sales, which have grown only 5.4 per cent compared with a 11 per cent industry growth.

"Our exports have taken a hit this year mainly owing to the preponement of requirement during the Iraq war in February 2003. So those sales were reflected in our 2002-03 results itself," said Vishwambar Mishra, chief operating officer, farm equipment sector, M&M.

The company expects a 8 to 10 per cent growth in the domestic tractor sales in the current fiscal. M&M sold around 5,700 units through MUSA in the US in fiscal 2003 against 4,700 odd units in fiscal 2004.

The company has etched out a plan to augment its exports in the current fiscal, including broadbanding it MUSA range of products with three new launches and expanding to other markets such as Europe-Spain and Portugal, Iran, Austarlia and New Zealand.

The new product launches include a 75 hp tractor which has already been shipped to the US. Also on the anvil is an entry into the domestic sub-30 hp segment, which constitutes 20 per cent of the market.

In new markets, M&M will sell tractors under the Mahindra brand but it is considering sourcing some high-powered tractors from Mitsubishi and Tong Yang Mulsan.

M&M has been selling Mitsubishi and TYM products in the US. Of the new markets, M&M is upbeat about the 20,000 unit Iranian market which has been using high-powered tractors thus far. M&M hopes to carve a niche for low-powered tractors in Iran with its existing product range.