Mahindra and Mahindra is investing in farming-as-a-service (FaaS) early on in order to stay ahead of the competition, anticipating the technological revolutions the sector is bound to experience in the near future.
M&M’s objective, according to Senior Vice President, Farming as a Service & Head of Farm Sector Strategy Ramesh Ramachandran, is to expand the program nationwide, affecting 20% of India’s farmers, or 20 million farmers, by 2018.
Krish-e, Ramachandran Says, is a business vertical within Mahindra’s agricultural segment that aims to boost farmers’ income per acre through technologically driven services. Mahindra offers FaaS services through its Krish-e centres at Mahindra and Swaraj dealerships, totaling around 100 locations, since its launch two years ago.
Farming as a service is a recent addition to India’s farming industry. This company provides cutting-edge, professional-grade farming and allied services. In addition to offering agronomy consulting and farm equipment rentals, Mahindra’s Krish-e banner also offers cutting-edge precision farming solutions.
Ramachandran explained the strategic aim behind Krish-e by saying, “We view it solely from a business perspective”. This is a strategic moat for us that surrounds our core business markets, which is in tractors and also in farm equipment. We expect 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
Mahindra is currently nurturing the young buds of potentially profitable revenue streams that may arise from the FaaS business itself, with examples including IoT solutions for rental entrepreneurs to keep track of their farm machinery or precision farming, specifically in the sugar cane industry.
Currently, Krish-e is intended to be a differentiating layer for Mahindra compared to its competitors and an initiative that is innovative for Mahindra’s horizon trends and changes. “As leaders, we must constantly think 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. In the last two years, Mahindra has also put up over 1,000 taknik (technique) plots around the country to demonstrate the tangible benefits of using Krish-e-services.
“The proof is in the tremendously beneficial relationship we’ve built on the ground.” Through these services, the farmer builds a long-term and valuable relationship with the brand. Ramachandran believes that this kind of stickiness can only be achieved by everyone following these guidelines.
Ramachandran believes Mahindra’s efforts in the FaaS market will not yield significant results for another 3-5 years. However, staying in the market for a long time gives them an opportunity to iterate and improve their services.
Mahindra’s Ambitions
“For illustration, in smart fertilisation, we’ve been able to provide a certain level of service since we’ve been in this domain (smart fertilisation) for almost four years, and therefore we’re ready to optimise, lower expenses, and so on,” he described.
Over the next five years, Mahindra’s farm equipment aims are to tenfold its business by 2027, introduce 15 new products, and increase its market share and industry position.
Over the last three years, Mahindra’s tractor business has performed exceptionally well, according to Ramachandran. A growth of 27% was achieved in FY20, and a double-digit growth was achieved in FY21. With three back-to-back strong monsoons, the trend is expected to continue in fiscal year 2022, however, Ramachandran foresees growth to slow to 7% each year soon.