Indian multinational plans agricultural expansion

Indian multinational conglomerate Mahindra Group is looking for local partners across a range of sectors including agriculture and automobiles as part of a planned expansion into Myanmar, the group’s chief risk officer told The Myanmar Times.

Mahindra has only a small footprint in the country, having partnered with local firm Bandoola to sell tractors back in 2013. But earlier this year it startedsourcing pulses for import to India and is now planning to push into the Myanmar market on multiple fronts, KN Vaidyanathan, the group’s chief risk officer, said.

Although the group has operations ranging from defence and aerospace to timeshares and low-cost housing, the different business arms have tended to operate independently, Mr Vaidyanathan said. Myanmar is Mahindra’s first attempt at a country strategy.

“Myanmar was never a large enough market for any one individual business,” he said. But the group’s approach now is to try to bring multiple related businesses to Myanmar that can help support each other.

Agriculture is one key focus. Mahindra produces agricultural equipment including tilling and harvesting machinery, and Myanmar’s farming sector is under-mechanised, Mr Vaidyanathan said. The group also wants to bring its seeds business to Myanmar, and has an eye on the direction in which regulation has been moving.

At the end of last year, the Ministry of Commerce relaxed trading restrictions that allowed international firms to import certain products including fertilisers, insemination seeds and pesticides. Agribusiness officials are hoping the relaxation will be extended to other agricultural products.

Mahindra is also exploring opportunities for agricultural financing, with a focus on funding the purchase of agricultural inputs and machinery. “There’s microfinance and there’s banking,” said Mr Vaidyanathan. “[In Myanmar] we want to look at the space in between.”

Mahindra is not the only Indian conglomerate focused on expanding operations in Myanmar. Tata Group already sources pulses for export back to India, and its Myanmar country head Sunil Seth is also head of the Overseas Agro Traders Association of Myanmar (OATAM).

Like Mahindra, Tata Group is considering investments in the agricultural value chain. Mr Seth told The Myanmar Times in June that his firm has looked at setting up a milling facility to export more valuable finished pulses rather than raw produce. But without an established export market for the lower-grade pulses produced during milling the plant would not be economically viable, he said.

In expanding its pulse importing business, Mahindra is likely to run into issues that Mr Seth and the OATAM have already identified. Foreign firms are unable to buy agricultural produce directly from farmers in local currency, and instead have to buy from separate suppliers in dollars.

Foreign trading firms also have to make advance payments to the supplier. “While most of the suppliers are good, there have been cases where people have taken the money and not delivered,” Mr Seth told The Myanmar Times in June. He is hoping the OATAM can persuade the new government to address some of these issues.

Mahindra also sees potential in Myanmar for more business in the automotive sector, another area where Tata is active. The latter has dealers for passenger cars and an assembly plant for heavy trucks in Magwe.

Mr Vaidyanathan also sees a long-term need for locally produced commercial vehicles, although his group also has operations in used cars and vehicle servicing, he added.

“We’ll look at opportunities for the group, what investments we need to make and what partnerships we need to build,” he said.

 

Source: The Myanmar Times

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