For an easy drive
The biggest benefit from the merger is easier administration
The integration will ensure better market focus
Manu P. Toms
Mumbai, March 30
Mahindra & Mahindra's two tractor joint ventures in China will be merged into a single company.
At present, Mahindra China Tractor Company (MCTCL) based in Nanchang province and Mahindra Yueda Yancheng Tractor Company (MYYTCL) in Jiangsu operate as two independent companies with the provincial governments as joint venture partners.
If all goes well, MCTCL, the smaller joint venture in which M&M has 84 per cent, with the balance held by Jiangling Motor Company, will be merged with MYYTCL, the 51:49 joint venture between M&M and the Yueda group.
“Our partners in the first joint venture (MCTCL) have agreed to give up their ownership which will allow us to merge this company with MYYTCL. Now, we have to go through the legal process,” Mr Anjanikumar Choudhari, the outgoing President of Mahindra Farm Equipment Sector, told Business Line. He retires on Wednesday after a five-year stint at the helm of the tractor business.
Mr Choudhari said that the biggest benefit from the merger was easier administration. “Eventually, these two companies will become one. Then we need not have two boards, two legal departments and two sets of accounts,” he said.
Besides this, the integration will ensure better market focus as the product ranges of the two entities are complementary. The first focuses on tractors below 25 HP while the second one is on 30 HP plus tractors.
MYYTCL sold 22,500 tractors in the first 12 months, reporting a growth of 56 per cent, said Mr Choudhari. It exported 2,500 units.
Back home, M&M is poised to cross 1.65 lakh tractor sales this fiscal, registering close to 50 per cent growth. Its allied business such as agriculture implements and generator sets are also on the growth path.
“Farmers are moving to disc ploughs, harvesters, tillers and rice planters. That is where we are moving. In three years, we will have crossed Rs 100 crore in this business. It will be disappointing if we do not increase this by five to eight times in the next three years,” he said.
Mahindra Powerol is the market leader with a 31 per cent share in the genset business and an annual turnover of Rs 1,000 crore.