M&M enters Africa chasing $1bn revenue opportunity

Mahindra & Mahindra is looking to tap emerging business opportunities in Africa for which it has set up a new business unit to focus entirely on the continent.

As per Mahindra & Mahindra, Africa has the potential to grow 10 times to around Rs 6,400 crore business in five to seven years. The India’s largest utility vehicle and tractor maker group presently earns about nearly Rs 960 crore annually from Africa.

The new arm will be headed by Ashok Sharma, who is on the group executive board and the president of the agriculture business at M&M.

The new unit will serve as an internal distributor for the company, addressing to the entire group's business needs like two-wheelers, trucks, etc.

The group already has a local office in South Africa and will set up three more in Egypt, Nigeria and Kenya.

Sharma told Economic Times that the idea was to become a local company instead of having people sitting in India exploring opportunities from afar. M&M will look at specific requirement of the market, customise the product and engineer it for the needs of the local market.

"The channel partners, government and the other stakeholders may not be able to understand the impact brand Mahindra can have. When we go as 'One Mahindra', then they will be able to see the impact we can have on the local economy," Sharma told ET.

These new offices will have local companies and employees that would develop products for the local markets.

Pawan Goenka, executive director of M&M recently told ET, "We have multiple businesses in Africa. Instead of each business going independently, we are treating the African business unit as our virtual distributor. Through the new business model, the company will have synergies in distribution, supply chain, spare parts, service, advertising and branding, helping dealers become more viable.”

Out of 50 countries in Africa, M&M has active presence in 20 with small assembly bases in Chad and Mali for tractor market.

ET reported that M&M’s business in the continent has been growing at strong double digit rates over the past four to five years.

Mahindra currently exports about 11,000 vehicles annually to Africa, including 8,000 units from its automotive business (utility vehicles, trucks and two-wheelers) and 3,000 tractors.

(Image: Reuters)