Mahindra & Mahindra to buy Turkish tractor company

Mahindra & Mahindra, which yesterday unveiled India’s first autonomous tractor, has announced the 100 percent equity acquisition of Turkish tractor manufacturer – Erkunt Traktor Sanayii A.S, and 80 percent stake in Erkunt Sanayi A.S. The acquisition slated to be completed by November 30, 2017, will be done by Mahindra Overseas Investment Company (Mauritius), a wholly owned subsidiary of the company (MOICML) that would see the company spend 260 million Turkish Lira (Rs 478 crore). The Armagan family holds 35% of the foundry business. “The acquisition of Erkunt will enable Mahindra to expand its footprint in the world’s fourth largest tractor market”.

Mahindra, the world’s largest tractor maker by volume, has been courting Erkunt for three years.

Turkey’s tractor market sees annual sales of around 71,000 units valued at Dollars 1.7 billion and has reported a compounded annual growth rate (CAGR) of 10.9 percent in the last four years, according to M&M.

Auto-implement lift – Feature in the tractor that automatically lifts the work tool from the ground at the end of a row and lowers the tool after the tractor has oriented itself for operation at the next row. Much like its previous acquisitions, Mahindra will allow the current management at Erkunt to run the show, but have a strong representation on its board.

Rajesh Jejurikar, president, farm equipment sector, M&M said, “Today, the need for farm mechanisation is higher than ever before due to labour shortages and need to improve productivity and farm produce yield”. “Turkey is a very strategic market”. It will also be deployed across worldwide markets such as US and Japan, giving Mahindra tractors a distinct competitive edge in global markets. However, for global markets, larger tractors would be pushed as the farm sizes there are much larger, Goenka said. Global operations now account for nearly 35% of the company’s $3.5-billion farm equipment business. The farm equipment segment contributes to a fifth (20 percent) to the overall revenues of the Mahindra Group.

Erkunt Traktor markets tractors with the brand name “Erkunt” in Turkey and and exports to the foreign market with under the brand “Arma Trac”.

The company’s revenue in the calendar year 2016 was $88 million and it sold around 4,700 tractors during the year. The Indian company intends to use Erkunt as a beachhead to enter the Middle East, CIS and North African markets. And once the domestic expansion reaches desired results, it will also be deployed across worldwide markets such as the U.S. and Japan. Exports constituted around 7% of sales. The company has its factory in Ankara, Turkey, and employs around 355 people. It is supported by a distribution network of 95 dealers and 326 authorised service locations.

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