India's largest tractor manufacturer (27% market share), M&M, may have to wait longer to acquire the tractor unit of Gujarat Tractors Corp. (GTC) This is due to two court petitions accusing M&M of not paying enough for the land that goes along with the unit.
Apart from tractors, M&M enjoys nearly 58% market share (52% in FY98) of the UV segment. In FY99, its UV sales fell 7.3%, against an industry sales decline of 16%. Its tractor sales appreciated by 2.3% against industry sales growth of 3%. However, its nearest competitor, Punjab Tractors (approx. 18% share) posted 19.6% growth.
Initially in January 1999, M&M's plans to acquire 51% stake in GTC fell through after some dispute over the share price. M&M initially agreed to Rs 13 per share, but after some pressure from the state government, finally ceded to Rs 20.
In March 1999, M&M had also announced its plans to acquire 51% stake in HMT's tractor unit for Rs 1.4 bn. TAFE was the other bidder. HMT has a manufacturing capacity of 30,000 units p.a. The deal will be finalised only after 6-8 months after necessary due diligence work is completed. If the GTC and HMT acquisitions go through, M&M's tractor market share could be in excess of 35%. This could enable M&M to counter threat from Punjab Tractors more effectively.
Both these acquisitions are critical for M&M's success in the tractor business. After its restructuring in the last month, M&M's auto business has become a lot leaner, with all unrelated businesses restructured under appropriate business heads. If both these acquisitions go through, competitors like Punjab Tractors and TAFE will find it very difficult to wrest market share from M&M. Analysts have recommended a BUY as there is still scope for higher tractor sales on the back of rural growth.
Mahindra & Mahindra has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). During the quarter, revenues grew by 15.6% YoY and adjusted net profits grew by 18.5%.
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