Mahindra ShubhLabh Services (MSSL), a subsidiary of Mahindra & Mahindra (M&M), has signed a joint venture agreement with the 3.2 billion euro Univeg, a Belgian fresh produce company.
The JV, Mahindra Univeg, will focus on developing a fresh fruit supply chain to cater to the domestic and international markets. MSSL will hold 60 per cent stake in the JV, and Univeg the remaining 40 per cent.
“This JV will enable both companies to leverage each other’s strengths thereby providing a win-win for farmers and end-consumers alike,” Pawan Goenka, Executive Director & President, Automotive & Farm Equipment Sectors, M&M, told a press conference.
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“We plan to strengthen our partnership by further improving the fresh produce supply chain through various interventions and investments across India.”
``The initial investment in the JV will be Rs. 30 crore to build capability and supply chain. But phased investments will follow. The investment in transport, cold chain etc. will be done by others. We hope to generate 100,000 tonnes of fruit trade in the initial stages,” he added.
The Indian fresh fruit market is estimated at Rs. 2,00,000 crore, with the organized segment estimated at a mere Rs. 10,000 crore (5 per cent).
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MSSL launched its fresh fruit brand, Saboro, in November 2013, and the produce from this JV will also be marketed under the same brand.
The JV’s immediate focus will be bananas, apples, pears and kiwi fruit. MSSL is already the largest exporter of grapes from India, and this will remain out of the ambit of this JV but high quality fruits will also be imported from across the world. Mr. Goenka said imported fruit in India sold at a 15-20 per cent premium.
Hein Deprez, Executive Chairman, Univeg Group, said fruit in Delhi and Mumbai were priced the second highest in the world after Tokyo. “Prices are already too high.” “Indian buyers will pay a 5-10 per cent premium for high quality branded fruit but not more,” Ashok Sharma, CEO, Agri & Allied Business, M&M, said. “We can lower costs with supply chain efficiencies and buying efficiencies. Our premium will not exceed 5-7 per cent,” he added.