MUMBAI (TIP): The $17-billion automotives-to-software Mahindra Group (M&M) is buying a 33% stake in Japanese conglomerate Mitsubishi’s tractors and agricultural equipment division for $25 million, making the Indian major’s first foray in the manufacturing sector in the world’s third largest economy. With its presence in Japan through Mitsubishi, M&M, the world’s largest tractor manufacturer by numbers, wants to tap the fast growing ASEAN market and cross-sell products and brands in markets.
The deal allows M&M to take a 33% stake in Mitsubishi Agricultural Machinery (MAM) through fresh issue of common shares and also non-voting shares. Mahindra will also get four board seats.The fund infusion will be used by MAM for technology upgradation, product development and research & development, said M&M executive director Pawan Goenka. The partnership is aimed at synergies for both the companies in the global agricultural machinery space. In fiscal 2014-15, the company had revenues of $408 million, a joint release from the companies noted.
The two companies aim to jointly develop products for the tractor and agri-machinery space. In addition, the partnership will enable MAM and Mahindra to improve cost competitiveness though joint procurement and optimize the supply chain. Goenka said MAM’s product range in the tractor space fully compliments Mahindra’s products in the category. At present, some of MAM’s tractors are sold under Mahindra brand name in the USA. For India, Mahindra now plans to launch MAM’s superior range of rice planters, he said. It also manufactures combine harvesters and agri-machinery.