The country’s largest tractor maker, Mahindra and Mahindra (M&M), is expecting half its revenues in the farm equipment business to come from overseas exposure by 2019, said managing director Pawan Goenka on the sidelines of an event. The company announced acquisition of the manufacturing and foundry businesses of Turkish tractor company Erkunt Sanayi at an estimated cost of Rs 735 crore at the event. According to M&M, the acquisition could boost its top line by around Rs 600 crore annually. Goenka said, “After Hisarlar, this is the company’s second acquisition in Turkey, which is the fourth-largest tractor market in the world. Turkey’s farm equipment market is estimated to be worth around $1.7 billion.” Erkunt is the fourth-largest tractor maker in Turkey and has a 6% market share in the country. It will help Mahindra and Mahindra foray into new markets such as the West Asia, North Africa and the CIS countries.
This is the fourth acquisition for the company in the farm equipment space in the last three years. In March 2016, M&M had acquired a 35% stake in the Finland-based specialised harvester company Sampo Rosenlew. This acquisition, according to M&M, will help it improve its harvester business globally. The harvester technology derived from this acquisition will also be adapted for the domestic market at Indian price points. The company also acquired a 33% stake in Mitsubishi Mahindra Agricultural Machinery, Japan, in May 2015 to cater to the global rice value chain and a 75.1% stake in Turkey-based Hisarlar last fiscal to address the global range of soil preparations. With these acquisitions, the company aims to grow into new segments and geographies.
M&M also has presence in major markets such as the US, China and Japan. Through these markets, it has also been able to enter the Mexico and Brazil markets. M&M recently sold its stake in the China joint venture Mahindra Yueda Yancheng Tractor Company, and plans to independently operate in the country. The farm equipment sector is a critical component in M&M’s armoury. It accounts for approximately 20% of the revenues of the auto major. Most of the earnings from this segment come from domestic tractor sales. In the previous fiscal, the Mumbai-based company sold 2,48,409 tractors in the domestic market, a growth of 23% over the previous year. Currently, M&M is the fifth largest-selling tractor brand in the world by revenue, and leads in volume terms.