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M&M eyes China, Russia marts

October 30, 2004 12:00 IST

Mahindra & Mahindra is looking for inorganic growth in China and Russia. The company is eyeing a tractor assembly unit in China and is in negotiations to acquire a Russian vehicle manufacturer.

K J Davasia, executive director & president, farm equipment sector, M&M, said, "We are looking at acquiring a majority stake in a Chinese tractor company. Our team has been studying the feasibility of such an acquisition and we hope to take a final decision on it by December."

He declined to name the company under consideration, while saying that "it is among the bigger players in China".

M&M had unsuccessfully bid for a Finnish tractor company, Valtra, last year, and has since been on the lookout for overseas tractor assembly units.

M&M has also zeroed in on a vehicle manufacturer in Russia. Alan E Durante, executive director & president, automotive sector, said, "Russia in the next possible country, where we are want to grow our overseas business. We are looking at an assembly unit in the country and hope to take decision on it in the next 6 months."

The company is looking at funding these acquisitions through its recently concluded $100 million foreign currency convertible bonds issue.

"We have a cash surplus of around Rs 300 crore (Rs 3 billion), along with $82 million of the recently completed FCCB issue. These funds will be utilized primarily for acquisitions," Bharat Doshi, executive director, finance and corporate affairs said.

M&M is looking at stepping up its exports significantly in the next five years. "We are targeting exports at 15-20 per cent of our total production in the next five years, from the current levels of around 3 per cent," Doshi said.

The company is looking at increasing exports of tractors from the current 20 per cent to 30 per cent in the next three years, he added.

The company is also studying the feasibility of sourcing manufacturing components from China. "We are looking at China a low-cost export base in the next few years," Doshi said.
BS Corporate Bureau in Mumbai