Japan’s Sumitomo Corp. Group announced it will enter into a joint venture with India’s Mahindra Agri Solutions Ltd., a subsidiary of Mahindra & Mahindra, part of the $20.7 billion Mahindra Group.
The joint venture will entail Mahindra and Sumitomo Corp. holding 60% and 40% equity respectively in the new company named Mahindra Summit Agriscience Limited, subject to the parties receiving all applicable approvals, expected in January 2019.
The Times of India quoted Mahindra Agri Solutions CEO Ashok Sharma saying the joint venture aims to achieve $100 million (over Rs 700 crore) in annual sales in the next five to six years.
India, a country of over 1.3 billion people, is one of the biggest agricultural power countries where the production and consumption of staple crops such as rice and wheat are the largest in the world. Its agricultural land area is about 150 million hectares which is four times as big as the total land area of Japan.
However, the yield per unit area in India is still much lower than global average and more efficient and effective agricultural practices have become social needs which results in the rapid expansion of the demand for agricultural materials such as crop care products and fertilizers. The country has a lot of crop varieties such as rice, wheat, cotton, beans, vegetables, fruits, tea etc. which Japanese crop care manufactures compile know-how and experiences.
Mahindra is the largest tractor manufacturing company in India (market share 42%) and also has other business such as automobiles, irrigation facilities, IT etc. with robust sales network throughout the country. The Mahindra Group with Mahindra as the core is an innovative conglomerate corporate group being proud of its outstanding publicity and credibility. On the other hand, the Sumitomo Corp. Group has rich experience and know-how in its distribution business over the world and is confident of its track record of penetrating and marketing a large number of crop care products, being mainly Japanese products, to the market.
According to Sumitomo, “By synergizing the business know-how and product development capabilities at the Sumitomo Corp. Group with tangible and intangible platforms proud of the Mahindra Group, we respond to social needs of Indian agriculture and provide new value to agricultural producers.”
The global expansion of crop care distribution business by the Sumitomo Corp. Group will be the 33rd country with capital participation in MSAS and will cover about 90% of the top 20 countries of the world crop care market.