By IANS,
New Delhi/Mumbai : The Mahindra Group’s farm equipment arm Monday signed an agreement with one of top three Chinese tractor manufacturers to set up a majority-owned joint venture with an investment of $26 billion.
In a regulatory statement, Mahindra’s Farm Equipment Sector said it has inked a deal with the state-owned Jiangsu Yueda Yancheng Tractor Manufacturing Co Ltd, under which it will acquire its assets and liabilities worth $50 million through a joint venture company.
The Mahindra group will hold 51 percent stake in the joint venture, through its subsidiary, Mahindra Overseas Investment Co (Mauritius) Ltd.
This will be Mahindra’s second venture in the Chinese tractor sector after it acquired Jiangling Tractor and set up Mahindra China Tractor Co Ltd.
“The JV between M&M and Yancheng Tractor will further combine Indian entrepreneurial and managerial skills with Chinese competitiveness and efficiency,” Mahindra Group vice-chairman and managing director Anand Mahindra said in a statement.
“I am sure this formidable combination will contribute substantially towards realising our ambition to be the leading tractor manufacturer in the global market,” he added.
According to Shao Yong, president of China’s Yueda group, which has a turnover of $5.8 billion, the joint venture will gain from the “operational excellence, international sales and distribution network and research and development capabilities of Mahindra” to become “China’s leading tractor company”.
Yancheng Tractor’s Huanghai Jinma brand is the number-three tractor brand in China in terms of tractor volumes last year.
According to the press release, China’s tractor industry has grown at an annual rate of 40 percent since 2000.
The growth can be attributed to the government’s new agriculture policy, as well as more fund allocation for rural economy – that has raised the income level of Chinese farmers.
Describing this joint venture as a “significant step” in Mahindra’s China plans, Anjanikumar Choudhari, president, M&M Farm Equipment Sector, said it would give a larger platform on which to build the company’s Chinese business plans.
“We will have a product range going up to 125 horsepower. We will also have a large manufacturing base which will be used to not only produce for the domestic market but also for low cost manufacture for exports,” he said.
Currently, Yancheng Tractor has a distribution network covering 25 provinces in China and exports tractors to over 60 countries, including the US, South America, Russia and Africa.