CNH Industrial says it is ‘open’ to partnerships in India after Escorts-Kubota deal
CNH Industrial, one of the world’s leading tractor manufacturers, is trying to expand its strength through new product additions, production expansion and potential local partnerships in the tractor and tractor industry. $8 billion agricultural equipment in India.
The company, which is the 6th largest tractor seller in India, produces tractors of 50 hp and above under the New Holland brand. It also offers agricultural machinery such as harvesters and post-harvest machinery, bringing in about $1 billion each year.
The recent deal between the Nanda family-run Escorts and Japan’s Kubota has set the tone for what the market sees as an aggressive battle for player market dominance. The Indo-Japanese company has said it aspires to be India’s largest tractor manufacturer, overtaking current heavy-duty trucks Mahindra and Mahindra (M&M).
When asked if it wanted to expand into India through acquisition, CNH said it was “open” to partnerships.
“We are absolutely open to it,” said Raunak Varma, managing director of CNH Industrial (India), in an interview with BusinessLine. We are interested in collaborating with players who can bring value to the table. For expansion, the majority of Indian OEMs have chosen the inorganic route. Because the barrier to entry is now quite high, international OEMs are acquiring stakes in domestic players.”
Varma, on the other hand, said the company is not currently in talks with anyone about forming a partnership, but the partner needs to bring significant assets to the table, such as competitive production pricing. New Holland and John Deere are newcomers to the market that have established their own products and distribution networks in the country without relying on partnerships.
“More than half of the market is made up of products over 50 horsepower.” Market meat is in the 40-50 horsepower bracket, where we want to bring in products. Over the next three years, we want to triple our current market share of 4%. In 2021, our agricultural business produces an income of 6500-7000 crores. “We want to be a billion dollar company soon,” Varma said.
CNH is investing 350 crore to increase tractor manufacturing by 60% to 80,000 units in the coming year, up from 50,000 last year. Additional product-related investments will be made.
R&D and Export
CNH has established four research and development (R&D) centers in India, one of which is dedicated to construction equipment. Over the next two years, the newest, being built in Gurgaon, will become the largest company in the world, employing 1,000 people.
“We have R&D activities for tractors in Noida, harvesting in Pune and construction equipment in Pithampur.” “We have now built a global R&D center in Gurugram, where we aim to centralize R&D from high-cost countries,” Varma continued.
Apart from R&D, the company wants to make India the main market for utility tractors. CNH has established itself as a market leader in terms of value. CNH sold 14,000 tractors in the export market last year, including 5,000 in the NAFTA market, followed by South Africa and Southeast Asia.
India offers a competitive edge
CNH intends to supply India-made components to its sister companies around the world, which will lead to larger parts purchases. “Given the supply chain issues we have witnessed, India provides cover for the company against China.” We are now looking as a group at how we can better leverage India as a ‘low cost nation’ with the initial aim of buying half a billion more from here. “From 2021, the purchases would be $600 million, and we want to double that,” Varma continued.
First published: April 19, 2022, 11:41 a.m. IST