Farmers give Mahindra (and maybe Narendra Modi) a sliver of hope

Indian conglomerate Mahindra Group said sales of farm equipment are much better than expected as the country’s vast hinterland bounces back from lockdown, despite the coronavirus running rampant.

A Mahindra Yuvo tractor in action
A Mahindra Yuvo tractor in action

Tractor sales jumped 69% in August from a year earlier, Mahindra’s head of finance, Anish Shah, said in an interview with Bloomberg Television. India’s farm equipment sales have been improving since a barren April, when all sorts of manufacturers across the country were forced to halt production and the top carmakers didn’t report any vehicle sales.

“Things have come back actually very well -- much better than what we expected," said Shah, who is set to become the conglomerate’s chief executive officer next year.

India is reporting tens of thousands of new Covid-19 infections a day and cases now total about 5.5 million, making it one of the hardest hit places in the world. That’s having a major impact on South Asia’s biggest economy, which Goldman Sachs Group Inc. expects to contract by almost 15% this year. Others have similarly bleak forecasts as the pandemic restricts business activity and consumption. Gross domestic product plunged a record 23.9% in April-June.

Also check these Vehicles

Find more Cars
Mahindra Xuv300 Turbo Sport (HT Auto photo)
₹ 10.35 - 12.9 Lakhs**Ex-showroom price
Add to compare
Check latest offers
Mahindra Ekuv100 (HT Auto photo)
₹8.25 - 10 Lakhs* *Expected Price
View Details
Mahindra Be.05 (HT Auto photo)
₹12 - 16 Lakhs* *Expected Price
View Details
Mahindra S204 (HT Auto photo)
₹12 Lakhs *Expected Price
View Details
Mahindra Marazzo (HT Auto photo)
₹ 12.3 - 14.57 Lakhs**Ex-showroom price
Add to compare
Check latest offers
Mahindra Alturas G4 (HT Auto photo)
₹ 28.77 - 31.77 Lakhs**Ex-showroom price
Add to compare
Check latest offers

Rural Boost

Mahindra’s farm equipment sales at least point to some sign of life in rural India, where 70% of the population live, and could be an encouraging sign for Prime Minister Narendra Modi as he prises the economy open again. Agriculture is a critical industry and was largely exempt from the nationwide lockdown, while decent rainfall this year has also helped farmers and their crops.

In addition to farm equipment, Shah said Mahindra’s information technology unit has performed well, with its order book reaching a three-year high. Even the group’s vacation business, which operates Club Mahindra Holidays, is seeing “huge demand."

Also Read : Anand Mahindra gifts tractor to farmer who dug 3 km-long canal in 30 years)

Returning to Normal

The outlook for the automobile business isn’t too bright, though. Mahindra is in talks with an investor to sell a stake in Ssangyong Motor Co, as the group reevaluates how it allocates money, Shah said. Mahindra owns about 75% of the South Korean car company.

HAAH Automotive has likely submitted a plan to acquire a substantial interest in Ssangyong for $258 million, the Economic Times reported last week, citing a person familiar with the matter. Shah didn’t identify the potential investor.

India was already going through its worst-ever slump in auto sales before the pandemic. While many companies, including Mahindra, reported improvements in recent months, the growth was from a weak base last year, when half a million workers lost jobs in the industry.

“It will take about three to six months to get anywhere close to normal, and getting back to normal may actually take even longer than that," Shah said, adding that smaller companies are more at risk across sectors.

First Published Date: 23 Sep 2020, 07:40 AM IST
Recommended for you
View all
Shopping Bag Shop Now
55% OFF
SOFTSPUN Microfiber Cloth - 4 pcs - 40x40 cms - 340 GSM Grey- Thick Lint & Streak-Free Multipurpose Cloths - Automotive Microfibre Towels for Car Bike Cleaning Polishing Washing & Detailing…
Rs. 269 Rs. 604
19% OFF
Involve Your Senses One Musk Organic Car Perfume, Involve Your Senses Strong Fiber Air Freshener to Freshen'up Your Car - IONE01-40 g,Car Accessories interior car perfumes and fresheners
Rs. 324 Rs. 399
73% OFF
pTron Bullet Pro 36W PD Quick Charger, 3 Port Fast Car Charger Adapter - Compatible with All Smartphones & Tablets (Black)
Rs. 349 Rs. 1,299
13% OFF
Jopasu Car Duster
Rs. 755 Rs. 869

Please provide your details to get Personalized Offers on

Choose city
+91 | Choose city
Choose city
Choose city
By clicking "View Offers" you Agree to our Terms and Privacy Policy

Dear Name

Please verify your mobile number.

+91 | Choose city