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Mahindra stake in Punjab Tractors Print E-mail
Written by Cherian   
Friday, 09 March 2007

 Mahindra & Mahindra agrees to acquire 43.3 percent stake in Punjab tractors limited

Mahindra & Mahindra Ltd., the fourth largest tractor manufacturer in the world and the domestic leader for 23 consecutive years, announced today that it signed a deal to acquire 43.3 percent stake in Punjab Tractors Ltd. at a price of Rs. 360 per share.

 M&M Ltd. along with its subsidiary Mahindra Holdings and Finance Ltd. agreed to acquire the stake from Actis Group and the investment companies of the Burman family, subject to the receipt of requisite approvals.                   

 Punjab Tractors Limited is a significant player in the tractor industry, having been in operation since 1974. Its “Swaraj” brand of tractors and farm equipment enjoy strong brand loyalty with customers.

 Mr. Anand Mahindra, Vice Chairman & Managing Director, Mahindra & Mahindra, said, “The acquisition adds significantly to our core business of farm equipment. We expect this to enhance value for our shareholders through the synergies which our farm equipment business and Punjab Tractors will together generate.”

 Mr. Anjanikumar Choudhari, President, Farm Equipment Sector, M&M, said, “This acquisition will add a well-respected brand, Swaraj, and a strong product range to our portfolio. It will further strengthen our market position in different regions in India. Some of the PTL models have clear opportunities in overseas markets in which M&M operates. The manufacturing capacities of Punjab Tractors fit well with our future plans, and its North India vendor base will provide us opportunities to derive good benefits from sourcing synergy.”

  M&M can now levearge the low cost engine and autocomponent divisions of PTL since it will acquire two PTL's two divisions.It will also acquire Swaraj Engines, a joint venture with Kirloskar for making engines for tractors and Swaraj Automobiles that makes autocomponents and seats for tractors.The light commercial vehicle business (LCV) jointly promoted by PTL and Sumitomo of Japan, is an additional business oppertunity.

 Mahindra's agressive offer for PTL is to maintain its lead over Tafe-Eicher combine. Last year, Tafe bought Eicher's tractor business for Rs 310 crore and increased its market share to 25% from approximately 15%.M&M suddenly had an arch rival as the gap in market share slipped to just 5%. Now, after the aquisition, M&M will command a market share of 45% in one shot.

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