India’s Largest tractor maker Mahindra & Mahindra is planning to invest in various startups in agricultural sector. They are planning to eliminate traders and have direct access to customers and farmers as the company is expecting very high growth over the next 5-6 years.
“Agriculture is still very unorganised in India and growth is low. But with the help of technology we can organise this sector in coming years,” said Ashok Sharma, President and chief executive of Mahindra Agri. “We are in touch with startups in the agri space. If we like the ideas we can partner them or buy equity or buyout a company.”, he added.
This initiative by Mahindra & Mahindra is going to create more opportunity and can help business models to grow in this market. The company which sells from seeds to fertilisers to irrigation products is very much keen to develop technology which will help farmers buy and sell directly online, seek online advisory services and cut the losses due to multiple middlemen.
“These are important interventions that will transform the supply chain,” Sharma said. The company is planning to pass the margins to farmers which they currently pay to distributors and retailers. Experts say execution is a challenge but the group can leverage its tractor dealer network across India.
“It very easy to create a digital platform but creating a supply chain is difficult,” said Hemendra Mathur managing DirectorSEAF India Agribusiness international fund. “It is a challenge unless you have on-ground presence. Not many company in India now rural India as much as Mahindra does due to its tractor business. Company will have to leverage dealer Network, infrastructure and brand.”
Mahindra Agri recently diversified its business to dairy, pulses and edible oil and reposition itself as an input and food company primarily from input and crop care company. It is expanding its products and reach in both local and overseas markets. In the local market, it is conducting a pilot in Madhya Pradesh to sell milk in and around Indore and Bhopal and is planning to expand outside the state after 2017.