Mahindras clinch Gujarat Tractor deal

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 components.

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.