Illinois-based Deere and Company, widely known by its brand name of John Deere, plans to consolidate operations in India and be present in the entire value chain of farm equipment. It recently opened its fifth manufacturing unit in the country. Global chairman and chief executive officer, Samuel Allen, in an e-mail interview with Sanjeeb Mukherjee, talks about the company’s growth plans. Edited excerpts:
Recently, Indian tractor major Mahindra and Mahindra claimed it was the world’s largest tractor maker by volume, which you countered. What is position of John Deere on this?
There is no official reporting of the number of units sold by agricultural equipment companies worldwide. Any statement that compares volumes of units sold is based solely on the judgment of individual companies and their own calculations or estimates. However, total sales of products expressed in financial terms are most definitely reported by publicly-traded companies. On this commonly-reported measure, Deere remains the world's largest manufacturer of agricultural equipment.
What market does Deere look for in farm equipment here?
Our sales in India is doing very well and exceeding our initial expectations. John Deere has made a significant progress towards being a complete agricultural solutions provider. Customers can benefit from our harvesting equipment, irrigation equipment and post-harvesting equipment. Our ultimate success in India and in markets around the world would come from our ability to provide tools and solutions to help customers be successful.
What is Deere’s market share in tractors and other major farm equipment in India and how much will it grow in the next three to five years?
John Deere sees significant growth in the Indian market and will have sufficient production capacity it. Our market share varies from state to state; it is as high as 18 per cent in some and is growing year by year.
Do you think rising wages of farm labour are pushing a major mechanisation drive across India? If yes, what kind of equipment will ride this trend?
Not only rising wages. There is a need for right technology to support yield improvements, a serious concern for a country like India. Usage of specialised agricultural equipment like combine harvesters, sugar cane harvesters, cotton pickers and forage & hay equipment, with the right agronomy practices, are going to play vital role.
How does Deere stand to gain from this?
John Deere understands the emerging needs of the Indian farmer in the value chain, and shall be able to support this with the right products and programmes.
What is Deere's total investment in India till now and how much will it scale up in the next three to five years?
As we announced earlier in the month, we are making an additional investment of $100 million in India, of which $80 mn will be invested for the Dewas works and the remaining $20 m for additional capacity development at our manufacturing base in Pune.
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Do you plan to start any more manufacturing facilities. What products will you be looking at?
In India, John Deere operates six facilities, of which five are manufacturing locations and one is for engineering and technology services. These are spread all over the countr. We are currently focusing on execution of some ongoing projects.
How much will John Deere India's bottom line be this year and how much has it grown over last year?
Our objective is to serve farmers through best technology equipment and there has been a continuous upward trend in terms of sales.
How much will John Deere India contribute to the overall group's bottom line and how much will it grow over three to five years?
John Deere does not report sales or income for individual countries. Sales in India are doing very well and exceeding our initial expectations.
John Deere acquired shares of its joint venture with Ashok Leyland some years before. Are you looking for more such expansion?
We are very happy with our association with Ashok Leyland for construction and forestry equipment, and production from the JV has started from the Chennai plant in November 2011.
