Mahindra & Mahindra is at last acquiring a
controlling stake in Gujarat Tractor Corporation. The company has finalised a deal to take
51 per cent equity holding in the Vadodara-based government of Gujarat company at a cost
of Rs 20 crore. It will pay a price of Rs 20 per share. The state government has decided
to divest its stake in the company.
With this, the Mumbai-based automotive group expects to
get a firm foothold in the Gujarat market. It also intends to make use of the low-cost
manufacturing facilities of the Gujarat Tractor plant in order to consolidate its position
as the No 1 tractor maker in the country and take on competitors, including multinational
companies, which have set up plants in India. Gujarat Tractor produces tractors of 20 to
80 horse power.
The Vadodara plant has a capacity to make 1,500 to 2,000
units in a year. Mahindra & Mahindra says it will make use of the plant to introduce
new models of tractors in a higher horse power range, and hopes to turn the company around
in a short span of time.
Gujarat Tractor Corporation was formed in 1978 after the
erstwhile ailing Hindustan Tractors was nationalised by the government. It is one of the
oldest tractor manufacturing units in India and its plant is known for producing rugged
and low-cost tractors. It has a foundry of its own and facilities for making auto
Mahindra & Mahindra had faced
problems with the deal earlier, and had been on the verge of calling off the negotiations
(). At one time,
the employees and some members of the public had sought a Vadodara court''s intervention in
the matter, contending that the price offered by the Mahindras for the plant and the large
plot of land was inadequate. The matter is now understood to have been settled.