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Gulf Oil Lubricants, a Hinduja Group company, and Mahindra & Mahindra (M&M), the world’s biggest tractor maker by volume, have decided to team up, in what is being termed ‘a game changing alliance’.
An announcement between the two companies is to be made on Tuesday. From rivals to close buddies, M&M and the Hinduja Group have come a long way.
Way back in 2007, M&M had acquired a controlling stake in Punjab Tractors Ltd, outbidding Hinduja Group firm Ashok Leyland. At that time, Punjab Tractors was the fourth largest tractor firm, and, with its ‘Swaraj’ brand, was renowned throughout North India. M&M wanted to get ahead in the race, said industry sources, for Chennai-based Tractor and Farm Equipment had earlier bought Eicher Motors’s tractor division, increasing its market share to 22 per cent.
Buying out Punjab Tractors helped M&M raise its market share to 40 per cent from the then 31 per cent.
In an earlier interaction with BusinessLine , Sanjay Hinduja, Chairman, Gulf Oil International, had said that since the tractor segment had done very well last year, there was a huge growth opportunity that the company was intent on tapping. Confirming the same, Ravi Chawla, Managing Director, Gulf Oil Lubricants India, said: “We are looking at new growth areas like tractors. We are planning to tie up with some original equipment manufacturers.”
The October 7 announcement between M&M and Gulf Oil Lubricants India is expected to be a step in that direction.
Funds infusion With two differentiated brands, Mahindra and Swaraj, M&M has been the market leader for 30 consecutive years. It commands a market share of 42 per cent in India, the world’s largest tractor market. Incidentally, infusion of funds from private equity has played an important part with tractor makers. M&M had acquired the 43.5 per cent stake in Punjab Tractors from private equity fund Actis and the Burman family in 2007.
Last year in July, Everstone, a Singapore-based India and South East Asia-focused investor, invested ₹200 crore for an undisclosed stake in Hinduja Leyland Finance, a commercial vehicle financing arm of the Hinduja Group.
The Chennai-based non-banking finance company is jointly owned by Ashok Leyland and other entities of the Hinduja Group. With an impressive sales growth in the tractor business, M&M’s association with Gulf Oil is aimed at adding more value to its existing success.
Correction
This copy has been corrected for error in headline.
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