Mahindra & Mahindra (M&M) has bought a 51 per cent stake in one of China’s leading tractor manufacturers, in an acquisition that will further boost the Indian company’s presence in the global market.
Mahindra Farm Equipment Sector (MMFES), the farm equipment arm of the Mumbai-based group, was paying Rs 113 crore to acquire 51 per cent of the tractor business of Jiangsu Yueda Yancheng.
Yancheng Tractor Manufacturing’s Huanghai Jinma brand is the third-largest tractor brand in China in terms of volumes in 2007.
The move catapults M&M’s tractor-making arm into the top three manufacturers of farm equipment globally in terms of number of tractors produced, said Bharat Doshi, group president, finance.
After the deal, M&M’s total output would be close to 1.7 lakh tractors a year. MMFES and Punjab Tractors Ltd together make around 1.45 lakh tractors annually, while Yancheng makes around 26,000, Anand Mahindra, vice chairman & managing director, M&M said. “Our nearest competitor did about 1.62 lakh last fiscal year,” he said.
The deal would form a joint venture in China with the company, and tractor related assets and current liabilities of Yancheng Tractors would be transferred to this venture.
This would be the second tractor venture of M&M in China, in addition to Mahindra’s current tractor business. Mahindra China Tractor Company Ltd.
M&M may eventually consolidate its tractor business in China, he added, without giving details.
Yancheng Tractors has capacity to make tractors from 16 to 125 BHP, said Anjanikumar Choudhari, president, Farm Equipment Sector, M&M.
The company would bring in expertise to manufacture tractors between 25 to 65 BHP. Yancheng exports 8,000 tractors annually, mostly to the US and Australia, which will be an added incentive for MMFES.