The Hindu : Business : Mahindra driving Chinese tractor

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Tuesday, Aug 19, 2008
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Mahindra driving Chinese tractor

Special Correspondent

Forms venture with Jiangsu Yueda Yancheng Tractor

— PHOTO: SHASHI ASHIWAL

RIDING ON the BOOM: Anand Mahindra (left), Vice-Chairman and Managing Director, Mahindra Group, and Bharat Joshi, Executive Director and Group Chief Financial Officer, at a press conference in Mumbai on Monday.

MUMBAI: The Mahindra group is well on its way to realising its aim of being the largest tractor manufacturer globally and in a significant step in that direction, its Farm Equipment Sector (FES) signed an agreement to form a joint venture in China with Jiangsu Yueda Yancheng Tractor Manufacturing Co. Ltd. (Yancheng Tractor), a leading Chinese tractor maker. Yancheng’s Huanghai Jinma is the number 3 tractor brand in China in terms of volume in 2007.

The tractor related assets and current liabilities of Yancheng Tractors will be transferred to this joint venture and the value of the net assets transferred to this venture will be around $50 million and Mahindra will hold 51 per cent (outlay of around $26 million) in the joint venture through its subsidiary, Mahindra Overseas Investment Company (Mauritius) Ltd. This is Mahindra’s second tractor venture in China in addition to its current tractor business, namely, Mahindra China Tractor Company (MCTCL), earlier Jiangling Tractors. Addressing the media, Anand Mahindra, Vice-Chairman and Managing Director, Mahindra Group, said, “We already have a successful joint venture with Jiangling Tractor Company. The venture between M&M and Yancheng Tractor will further combine Indian entrepreneurial and managerial skills with Chinese competitiveness and efficiency.”

M&M is close to being the leader because, last year, Yancheng produced 26,000 units and exported 8,000 units of tractors. M&M, including Punjab Tractors and Jiangling Tractors, made 1.44 lakh tractors giving a total of 1.70 lakh tractors.

The largest player, John Deere made 1.60 lakh units. Yancheng has a capacity of 50,000 units and the current year could see production of 30,000-35,000 units.

The Chinese tractor market is the fastest growing in the world clocking a 40 per cent CAGR (compounded annual growth rate) between 2003 and 2007.

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