The Hindu Business Line : M&M to continue sourcing Korean, Japanese tractors — Signs pact to acquire 80% stake in Jiangling Tractor

Mr Anjanikumar Choudhari, President of the Farm Equipment Sector, Mahindra & Mahindra Ltd, with Mr Chou Ming, Chairman, Jiangling Tractor Company, and First Vice-President, Jiangling Motor Company Group, during the signing of the joint venture agreement in Mumbai on Friday. - Shashi Ashiwal

Mumbai , Dec. 24

MAHINDRA & Mahindra Ltd (M&M), which acquired 80 per cent stake in China's Jiangling Tractor Company (JTC), will continue to buy tractors from Tong Yang of South Korea and Mitsubishi of Japan as part of supplies to its US market.

Speaking to newspersons today after the signing of the formal joint venture agreement with Jiangling Motor Company Group (JMCG), Mr Anjanikumar Choudhari of M&M's Farm Equipment Sector (FES), said that the Chinese tractors will not be able to fully replace the Korean and Japanese models, given the differing levels of product sophistication.

Mr Choudhari takes over as FES President in January.

In its growing US operations, M&M has a sales component that is made of outsourced tractors bearing its badge.

However, JTC will have a role in M&M's US plans as the Chinese company's compact models fall squarely in the fastest growing segment of the tractor markets in the US, Europe and Australia. JTC, projected to export 600-700 tractors this year, already ships to the US, Europe and East Europe.

Given that all M&M sales in the US are under the Mahindra brand, dealer brands earlier associated with JTC's North American sales will be slowly phased out. In the US, a dealer brand called Lenar is associated with imported JTC tractors.

Today's agreement follows the MoU of November 9 and was signed by Mr Anand Mahindra, Vice-Chairman & Managing Director, M&M, and Mr Zhou Ming, Chairman, JTC and First Vice-President, JMCG. JTC was a wholly owned subsidiary of JMCG.

"For us, China is not only a large market but one that will offer excellent growth prospects," said Mr Choudhari.

According to Mr Jiang Lin Sheng, Vice-Chairman, JMCG, the Chinese tractor company has found the right partner. "This is a win-win situation."

JTC, with an installed capacity for 12,000 tractors, produced 13,000 units per annum in the late 90s.

Its products straddle the 18-33 hp range and are sold in China under the `Fengshou' brand.

The company's output in 2004 may be 2,500 units, mainly due to JMCG's decision to de-focus on tractors and concentrate instead on its automobile business.

JTC's 2004 turnover is set at $3.5 million and that of JMCG over $1 billion.

M&M plans to increase JTC's sales and eventually enhance its scale of operations.

"There is room for productivity improvement and to transfer some of M&M's best practices from its Indian plants to the newly acquired Chinese facility," said Mr Choudhari.

M&M also intends to source components from China.

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