The $4 billion tractor-to-IT conglomerate Mahindra & Mahindra is in talks with European fresh produce supply chain and distribution companies to set up a supply joint venture to cater to international and domestic markets. The venture will leverage on Mahindra's agribusiness division, which is involved in contract farming, contract services, exports and agri retailing.
The venture will process and supply fresh produce which has huge demand overseas. "The European fresh produce market is worth $132 billion. We should look at the best produce which we can supply to the international market," sources said.
Vikram Puri, head, agri business, M&M, and CEO, Mahindra Shubhlabh Services, declined to name the companies with which M&M was in talks with.
Puri, however, said: "We are one of the preferred partners for transnationals in fruits and vegetables to collaborate in India. We are talking to multinationals which want to operate in the fresh fruits distribution business in the country," Puri said.
Fruits and vegetable retailing has attracted attention of most top Indian corporate groups. Industry watchers, however, observe that companies involved in supply and procurement are not investing in this space in a big way since organised fruits and vegetable retailing is still nascent in the country.
Mahindra Agribusiness, the operational entity of registered Mahindra Shubhlabh Services, would be an ideal venture partner for international supply chain companies.
Currently, Mahindra Shubhlabh exports 95 per cent of its produce to Europe, with the UK being the biggest importer and the rest going to West Asia and South East Asia. It sells to several European retail chains, including Carrefour, J Sainsbury, Albert Heijn, Bama, Morrison.
The division's main produce is grapes, apart from mangoes and pomegranates. It plans to export 5,000 tonnes of pomegranates and grapes, which will fetch Rs 75 crore (Rs 750 million) over three years.
MSSL is involved in contract farming across 100,000 acres in eight states, covering 30,000 farmers. The company had set up agri centres in various districts of the country either under the Mahindra Krishi Vihar franchisee model or directly as Mahindra Agribusiness. These centres are one-stop shop for agro service, retailing of agro inputs and procurement of produce.
To supply fresh produce to the domestic modern retail formats, the company is conducting a pilot project in Punjab over 100 acres. The company is supplying to retailers such as Subhiksha, ITC, Namdhary Fresh and is in talks with Reliance Retail to supply the produce. This was part of its strategy to sell fruits and vegetables under its own brand name - Mahindra. It is planning to export samples of mangoes under the Mahindra brandname after its grapes exports proved popular in Europe.
Mahindra Shubhlabh has also forayed into bio-fuels and trials are being conducted at pilot plants in Baroda and Kandivali. The company is also looking at planting and cultivating seedlings such as jatropha for producing bio-fuels.
Industry watchers believe that joint ventures in the fresh produce space would be a win-win situation for foreign companies, Indian firms and domestic farmers.
"With strong ties at the rural level, Indian firms are able to procure on a consistent basis. On the other hand, foreign partners can bring technology know-how in supply chain, cold storage, processing and best practices. These two factors complement each other," said Naimish Dave, director, OC & C Strategy Consultants, which advised Tata Chemicals and Total Produce JV.
