Rajesh Jejurikar, Executive Director (Auto & Farm Equipments Sector), Mahindra & Mahindra (M&M) talks about sales in farm equipment and expectations, tailwinds and headwinds that may impact the sector and international market situation among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:

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Sales were seen in the farm equipment segment of Mahindra & Mahindra in April 2020. What led to this and what is the outlook for the segment?
Tractor sales started in the last week of April and that’s why tractor sale is visible in the month. When you see the percentage of sales, then it is low. Dealerships started opening in the last week and about 50% of our dealerships are open currently. Maximum dealerships are open in green and orange zone. Since tractors are considered as an essential service and that’s why some of our dealerships are also open in red zone areas and because of that sale started in the last week of April. Supply of services and spare parts are also on.

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As far as farmers’ sentiment is concerned then it is very positive, especially in rural India because Rabi crops have been very good, quality and output wise. There are incidences when the output is good, but quality remains below satisfaction. However, this time both, the output and quality, have been good. Secondly, the prices in Mandis are also reasonable favourable. At the same time, it has been announced that the monsoon will remain normal this year. So, these are the factors that have created positivity among the farmers’ community. Besides, we expect that the government will spend in rural India in both agriculture and infrastructure areas. This is why tractor sales will improve in May and June as it is a pick season but we will have to wait and see that how many of the financers and finance companies can approve the finance in real terms. So, there are operational and execution issue but the overall sentiment is positive for tractors and farm assets. 

You have said that there are expectations that monsoon and farmers spending will be good this year. Can you tell us about the tailwinds and headwinds that can impact the sector? Also, update us about the level of ongoing production that is happening at your plants?
I will have to be careful while answering your question because this is a silent period and that’s why I can’t provide any forward-looking statement. From the production stand-point, many of our plants have already received the approval and they are, right now, in the phase to start to clear the work that was running in the production line as the work was stopped suddenly. They are also preparing to start in small numbers both on the tractor and auto sides. So, we are preparing ourselves for the next few months. From the manufacturing standpoint, the auto dealers have also started opening and about 10-15% auto dealerships have opened in last 4-5 days. And, more auto dealerships will be opened by next week. So, we are preparing ourselves for a slow coming back to the normalcy.

What is the situation for in the international market as it will have an impact on your overall business?
It is not easy to answer by providing a simple fact because the situation is different in every part of the world as most of the markets are still open in Japan, more than 60-70% market is open in Japan. So, in Japan where our farm machinery business is located there, we are impacted to a very much lesser extent. In the case of North America, retails are at reasonable levels because just 3-4 states are heavily impacted by the coronavirus and lot of rural markets of the country is open and retail business has been good in April. So, there is a different situation in every part of the world. We are facing constraints from India as the ports are locked and the borders of the neighbouring countries are congested. So, we will have to give time over a month or two and I think things will start functioning.

What are the steps that you will take as a group to minimize your cost and how are you dealing with possible salary cuts?
Amid the current situation, the best strategy is to create scenarios. So, every leadership team should handle the situation with agility and flexibility. There is a terminology ‘Strategic Planning’ but it doesn’t have any relevance in the current context because your plans can be based on scenarios as it is not sure that today’s plan won’t change after a week or so. The situation is evolving and we all have to work around multiple options and multiple scenarios. So, needless to say, that a company like ours will conserve cost, we are doing so. And we are preparing ourselves for a different scenario, which is different in different businesses. So, we should be adaptive and adjust to the evolving scenarios.