To stay ahead of the competition, Mahindra and Mahindra is investing in farming-as-a-service (FaaS) early on, anticipating the technological revolutions that the sector will see in the near future.
M&M's objective, according to Ramesh Ramachandran, Senior Vice President, Farming as a Service & Head of Farm Sector Strategy, is to spread the programme to all 1,600 Mahindra dealerships across the country, impacting 20% of India's farmers, or 20 million farmers, in the coming years.
According to Ramachandran, Krish-e is a business vertical in Mahindra's agricultural segment that intends to provide technologically driven services to boost the farmer's income per acre. Since its launch over two years ago, Mahindra has provided FaaS services through its Krish-e centres at Mahindra and Swaraj dealerships, which total around 100 locations.
FaaS is a recent addition to India's farming industry. It aspires to provide cutting-edge, professional-grade farming and allied services. Mahindra's Krish-e banner encompasses everything from agronomy consulting to farm equipment rentals to cutting-edge precision farming solutions.
"We see Krish-e from a strictly business lens," Ramachandran stated, explaining the strategic aim behind Krish-e. This is a strategic moat for us surrounding our core business, which is in tractors and also in farm equipment. We hope to make the farmer more wealthy by adding these value-added services through Krish-e, which is in some ways contiguous to our core business – either through the rental of agricultural equipment or the purchase of our tractors."
FaaS Business Is Profitable
According to Ramachandran, Mahindra is currently nurturing the green shoots of potentially profitable revenue streams that can arise from the FaaS business itself, with examples of viable revenue streams including IoT offerings for rental entrepreneurs to keep track of their farm equipment or precision farming, particularly in the sugar cane industry.
For the time being, Krish-e is intended to be a differentiating layer for Mahindra in comparison to its competitors, as well as an endeavour that is innovative for Mahindra's horizon trends and changes. "As leaders, we spend time thinking about how to maintain market leadership in an ever-evolving market," Ramachandran added. By studying trends in other nations, visiting our markets, and determining which trends are applicable in our own. Krish-e is drawn to activities that are just around the corner." Nonetheless, Mahindra believes it will be a much-needed venture in a competitive sector with over 18 participants.
Thus far, Mahindra has seen evidence of Krish-e’s promise in the form of a Rs 5,000-15,000 boost in income per acre for farmers who have adopted Krish-e-assisted farming methods. Mahindra has also put up over 6,000 Takneek (technique) plots around the country in the last two years to demonstrate the tangible benefits of using Krish-e-services.
"The proof is in the tremendously beneficial relationship we've built on the ground." The profits from these services ensure that the farmer has a long-term and valued connection with the brand. This kind of stickiness can only be accomplished if everyone begins to follow these guidelines, according to Ramachandran.
According to Ramachandran, Mahindra may not see substantial gains for another 3-5, yet staying in the segment for a long time allows us to have enough time and experience to iterate and optimize our services.
Mahindra’s Ambitions
"For example, in smart fertilisation, we've been able to offer a certain level of service since we've been in this field (smart fertilisation) for about four years, and therefore we're able to optimise, cut expenses, and so on," he explained.
Mahindra's farm equipment aims for the next five years are to tenfold its farm equipment (non-tractor) business by 2027, introduce 15 new products, and increase market share and industry.
According to Ramachandran, Mahindra's tractor business has performed exceptionally well over the last three years. In FY20, the company grew by 27%, and in FY21, it grew by double digits. With three consecutive strong monsoons, the trend is anticipated to continue in the fiscal year 2022, although Ramachandran expects growth to slow to 7% each year soon.
