Kindly shed some light on your Indian operations and products.
Claas is a German multinational company that manufactures agricultural machinery. The business potential of India has always been a point of discussion both within and outside India. India's large population and its consumption of farm produce offer a big growth opportunity for agri and food related business.
Claas came to India around 20 years ago. Initially, we had a local partner here with which we set up a manufacturing facility. 10 years later we decided to go on our own and set up a state-of-the-art manufacturing unit in Chandigarh.
Claas group has been manufacturing harvesters for rice and other crops and tractors for over 100 years. We have combine harvesters and forage harvesters for human consumption and animal fodder respectively. Our green line equipment process fodder and create silage for dairy farming. Some of them are self-operated while some of them are pulled by tractors.
In the course of business, Claas bought the tractor business from Renault. It gave the company a big foothold in the European market.
Various companies are making farm equipments, what measures do you apply to compete them?
One can make similar looking machines, but cannot match the high technology of our level. German technology in fact differentiates our machines with other competitors. Sometimes the cost of our machines might be an issue for farmers with respect to initial investment required in buying the machines. But when a farmer sees the returns from our machines after few seasons, he can easily differentiate them from others. They are built rugged and remain efficient for many more years than competition. The second key point is distribution. Equipment business is not just selling the machines; it is all about after sales services to the farmers. It also differentiates us from other manufacturers.
Kindly throw some light on your distribution networks in India.
Claas India follows a very robust model of distribution. Before setting up distribution, we work out product viability for a given market -does it have the right market potential or not? Then, we look for a distribution partner. Our distributors are our partners as they are part of our extended family. We support them with initial start-up and provide training to build up competency so that they can run the business efficiently. Our goal is to help our distributors build an integrated facility to serve the customers.
Some companies provide machines on custom hiring, do you have any such plan?
More than 50 percent of customers belong to custom hiring segment. Therefore, we address the hiring industry with special focus because of it places tremendous demand on machine's build quality and aftersales services. There will be a time when we will bring much advanced machines than what is available today, so that the hiring revenues would be more for the hiring customers. We plan to join hands with new generation enthusiasts who are looking to grow quickly by offering such high productive machines and join hands with a suitable financing partner, who can bring them the capital.
Please tell us something about your farmers training programme.
We have our own training facilities. We also extend our knowledge of machines to universities and the institutes. Currently, we have seven MoUs with such institutes where we share our knowledge of machines and applications. Many of the universities have good academic and laboratory knowledge, but there is a lack of its real application. Therefore, our partnering with the institutes is beneficial to the next generation of agricultural students.
What challenges do you face in convincing Indian farmers? And how do you tackle them?
The challenges we face in our country are quite well-known. The landholding is small, which limits our ability to bring more efficiency by deploying bigger machines. We overcome this to some extent by making products that match customers production requirement and have trained people to convince farmers why should they buy our machines. Brand loyalty is another big challenge and we build good relationships by providing good aftersales services and operational training to the farmers. They remain connected with us buy our machines again and again. Farm mechanisation levels, acceptance of high technology and financing are few more challenges.
What kind of financing module do you adopt to enable farmers to buy your products?
Financing is not a big issue in India as the Government of India has many schemes of its own. Most public and private banks carry mandates from RBI to maintain certain level of priority funding for selected sectors, including agriculture. There are many private NBFCs who have dedicated agri financing verticals. What needs to improve is the reach and turnaround time of financing as it happens for two wheelers.
What are your future plans for the Indian market?
Combine harvesters in India are our strength. We would like to continue to focus on them and bring more efficiency in terms of technology, operational methods and returns. Over the next two or three years, we will bring in more models of combine harvesters as well as rice transplanters. There will also be some activity with green line machines.
Do you think collaborative farming can ease out the challenges posed by fragmentation of land?
It is an interesting topic. If we combine small fragments of land into a single piece of land, it will definitely improve the efficiency by way of mechanisation. But, in some parts of Punjab, farm output has increased by about 40 percent because of farming in scientific manner even in small pieces of land. If farmers are open to new ideas and there is a collective participation from machinery, seed and fertiliser companies, the input side of farming can be improved tremendously and we can do better than what we are doing now within the restrictions of small landholding.