Mahindra eyes 5-fold jump in revenues from agri-business

The $6.3-billion Mahindra Group expects to grow revenues from its agri-business venture nearly eight-fold in the next five years by expanding among national and overseas retail chains, a top group official said.

Mahindra Agribusiness, the 10-year-old agricultural services and fresh produce supply unit of the group, achieved break-even in the last financial year with a business of Rs 50 crore (Rs 500 million). It was expecting a business of Rs 80 crore (Rs 800 million) this financial year, the official said, preferring anonymity.

Of the total revenue target, nearly Rs 250 crore (Rs 2.5 billion) was expected to come from fresh produce alone, he said.

The company supplies fruit such as grapes, apples and pomegranates under the Mahindra brand to European retail chains, including Carrefour, Sainsbury, Albert Heijn, Bama, Morrison, and domestic retailers such as Aditya Birla More and Reliance Retail.

It is also talking to other national and international chains for the supply of fresh produce, the executive said.

The company plans to increase the value and volumes of fresh produce it procures and supplies in the coming years to achieve its target. Currently, the company does contract farming in 2,500 acres in the country.

"We are at the end of the gestation period for this business and building critical mass. Once we achieve that, we can take bigger swaps and announce major investments,"' he said.

The company plans to take the share of domestic business to 45 per cent in the next couple of years from around 10 per cent now, by expanding its business in local markets.

Last year, the Mahindras entered into a joint-venture with South African supply chain company Capespan, to supply fresh produce to domestic and international retailers. The company has also tied up with the Netherlands-based HZPC, the world's largest seed potato supplier, to supply seeds to domestic and overseas markets.

"We have completed pilots and business plans are in place. We should be able to start operations soon," the executive added.

However, the company realised the impact of the economic slump on the retail sector. "We were expecting much faster growth in the retail sector but that has not happened. Even overseas retailers who have entered India are treading carefully. Our growth in fresh produce is in tandem with growth in food retailing," the executive said.