Escorts Agri Machinery (EAM) Chief Executive of Sales and Marketing and Emerging Business Shenu Agarwal first joined the Indian tractor manufacturer in 1993 and as he progressed in rank, he noticed a greater need the company could address. “It seemed like it would take India another 300 years to put a tractor on every farm,” Shenu laughs.
“So, we sat down with the team and said, ‘Guys, what are we doing? Are we doing business the right way, or do we need to do things differently?’” This was the catalyst for finding a new direction for the business and an idea that Shenu says was quite radical at the time. “Up to 80% of farmers in India have very small land holdings – it is very difficult for them to afford a tractor,” he explains.
“Even if they buy a tractor through a financing loan, it is very difficult for them to justify a return on that investment. That was the problem that had to be solved.”
For EAM – which has a keen focus on designing, producing and selling tractors – this meant looking beyond the very thing it gained revenue from. “The tractor is actually the beginning of the story, not the end, because it is only a source of power,” Shenu says. “So we wanted to turn our business model around completely and instead of being tractor sellers, we wanted to be a solutions provider.”
This wasn’t an easy change to make in the beginning. “We had to create a huge mind and culture shift within the company, going from product-centric to solution-centric,” Shenu says.
“We had to create this huge mind and culture shift within the company.”
“For more than 70 years, we were a very nuts and bolts kind of company; we knew how to engineer a crank shaft, how to design an engine or a rear axle, how to produce it in the best environment with great quality and efficiency, and how to sell it through our vast distribution network.
But what we didn’t know was anything beyond that. We didn’t know how the tractor impacts farmers or what challenges customers faced in their lives.”
Shenu says changing that mindset essentially meant turning the company on its head. “We wanted to create a very robust and agile company,” he says. “We wanted to feel like a young, vibrant company rather than a 70-year-old behemoth. But when you tell your R&D Head that you need to learn things from scratch or tell your sales team that this is not the way we are going to sell anymore, that becomes an interesting challenge.”
It was a problem the team was ready to handle and it culminated in the creation of new centres that provided farming equipment for rent or lease. “For example, if a small rice farmer came to us for a harvester, we’d tell them: ‘No problem, tell us the time and date you want it on your farm,’” Shenu says.
“We will send the machine to your farm with a trained operator, complete with fuel and everything; you don’t have to do anything at all. We will harvest that five-acre farm, we’ll charge you INR2,000 per acre for that and you are done.”
While it sounded like a great idea on paper, the execution took time to work out. “It was such a radical idea that we tried several models over three years to actualise it,” Shenu says. “We failed at least three or four times.” But it didn’t deter the company from its vision and EAM continued to trial the program until it worked.
“Now we are at a stage where, having gained all that experience from those failures, we are extremely confident that it is a sustainable model that can bring value to farmers, our business and other stakeholders involved. In 2018, we opened 25 large centres around the country. We are providing about 100,000 acres of agri-mechanisation services from these centres to farmers in those areas.”
Shenu adds that farmers using end-to-end mechanisation through EAM have increased their yield by as much as 20 to 30%. It has created flow-on benefits such as more money to reinvest in farms, buy better seeds and fertilisers, and hire better workers.
“Now other companies are embracing it and we welcome that,” Shenu says proudly. EAM is one of three business divisions under the broader Escorts Group along with Escorts Construction Equipment and the Railway Equipment Division.
It manufactures two tractor brands – Farmtrac and Powertrac – and offers a range of crop solutions, lubricants, spare parts and implements for the agricultural industry. It has three manufacturing plants in India and one in Poland.
With the success of the new agriculture equipment centres, it is now Shenu’s mission to continue fostering operational excellence within the business. “Operational excellence is about three things,” he says.
“First, that you have very robust standard operating procedures. Second, that there is clarity about the goals of your company among all stakeholders. And third, that if you have to deviate from your standard operating procedures or one of your goals because of a certain market situation, you should be able to respond to it quickly.”
Shenu believes most companies have been able to achieve the first two points but they struggle with the third one, particularly when they become large. “One thing we have been able to excel in at EAM that differentiates us from other players is our decision-making, which is quick, and we are a very agile company,” he adds.
With EAM now into its 75th year of operation, Shenu isn’t just relying on its success as a local blue-chip company. “We want to be significant in global markets as well.”