M&M seeks to emerge as a global player
Pradeep
Rane
25 August 2004
Domestic auto and tractor major Mahindra & Mahindra (M&M) is looking at acquisitions abroad to emerge as a global player. The company is also scouting for acquisitions in the European market for its tractor business. This follows its unsuccessful bid for acquiring Valtra.
The company is now planning to put up an assembly plant in Uruguay. It is aggressively pursuing export opportunities for the Scorpio in the Middle East, China, Central Asia and Eastern Europe, Africa and Latin America. The company introduced its utility vehicles in Italy in FY 2004 and intends to double its exports in FY 2005 by launching them in other markets.
M&M is also trying to increase its exports to the US and Europe. It has started shipping its new 75hp tractor and intends to launch three new products in the US during FY 2005. M&M''s automobile exports increased by 51 per cent in FY 2004. Exports will contribute significantly to the company''s sales growth. M&M has recorded a strong growth in the exports of tractors over the past two years with 8 per cent of its tractor sales in FY 2004 resulting from exports (mainly to the US).
However, its tractor exports declined by 17 per cent year-on-year in FY 2004 mainly due to the war in Iraq. By FY06, the company is targeting 25 per cent of tractor sales to come from exports and is planning to expand its presence in Europe, Australia, New Zealand and the Middle East.
Utiliy vehicle sales grew 35 per cent in FY04 and analysts expect this momentum to continue in FY 2005. The tractor industry rebounded due to good rains in FY 2004, which resulted in a bumper harvest and stimulated a sharp increase in farm incomes. The industry is a prime beneficiary of the recent budgetary excise duty cut from 16 per cent to nil in the recent budget. Also, improved financing and inventory corrections will influence tractor sales positively.
The poor monsoons this year are unlikely to affect the company, as there was satisfactory rainfall in areas where nearly 52 per cent of tractors are sold. Tractors are also witnessing increased applications in transportation, haulage and construction activities.
