|
India enters China tractor market
MUMBAI: India’s Mahindra & Mahindra Ltd. (500520.BY) Tuesday announced a
joint venture with Chinese automaker Jiangling Motor Corp., a step that will
give it access to one of the world’s largest tractor markets.
Mahindra, India’s largest tractor maker, said it has agreed to take an 80%
stake in the joint venture and contribute $8 million of the $10 million
investment needed to buy the facilities of Jiangling’s tractor unit,
Jiangling Tractor Co. Jiangling will hold the remaining 20%.
The acquisition will give it “a strong manufacturing base, an existing
distribution network in China and a complementary product range,” Mahindra
said in a notice to the stock exchange.
The company’s entry into China follows an unsuccessful attempt in September
2003 to buy Finnish tractor company Valtra Corp. Mahindra lost the bid to
AGCO Corp. (AG) of the U.S.
Mahindra didn’t immediately give more details about Jiangling Tractor, but
said the purchase of Jiangling Tractor’s assets is subject to some
undisclosed conditions and regulatory approvals.
Late October, the president of Mahindra’s tractors division K.J. Davasia
said the company was looking for an acquisition in China as the country
offered one of the largest tractor markets in the world. Davasia said then
that Mahindra was aiming for a market share of up to 15% in China within a
decade.
“The acquisition definitely takes Mahindra closer to its (stated) ambition
of becoming the world’s largest tractor maker,” said Sachin Kasera, analyst
at brokerage Pioneer Intermediaries. Jiangling Tractor has the capacity to
make 12,000 tractors a year at its plant in China’s Jianxi province.
ASK Raymond James’ analyst Kalpesh Parekh expects the acquisition to help
Mahindra’s business as its Chinese presence would grow its global tractor
sales and “reduce the dependence on the volatile domestic market”.
Mahindra, the world’s fourth-largest tractor maker, has the capacity to
produce around 80,000 tractors a year at its two manufacturing plants in the
western Indian state of Maharashtra. —Dow Jones Newswires
|
|
