Mahindra-Yueda joint tractor venture in China inaugurated

Mr. Anand Mahindra, Vice Chairman & Managing Director, Mahindra Group, and Mr. Hu Youlin, Chairman, Yueda Group, recently inaugurated the tractor joint venture formed between the two groups. The joint venture ceremoniously rolled out its 125hp tractor at a colourful ceremony at the JV’s new 38,000 tractor capacity plant at Yancheng, China, which was attended by senior Government officials of Jiangsu Province and Yancheng City.

The new company, Mahindra Yueda Yancheng Tractor Company Ltd. (MYYTCL), has been formed between Mahindra’s Farm Equipment Sector (FES), one of the world’s top tractor brands and the market leader in India, and Jiangsu Yueda Yancheng Tractor Manufacturing Co. Ltd., a leading Chinese tractor manufacturer. The registered capital of the JV is RMB 265 million. Mahindra holds 51 per cent share in the JV through its subsidiary, Mahindra Overseas Investment Company (Mauritius) Ltd.

This is the second tractor venture of Mahindra in China. Its current tractor business is known as Mahindra China Tractor Company Ltd. (MCTCL). With MCTCL’s Feng Shou and MYYTCL’s Jinma brands, Mahindra’s tractor operations in China are well set to exploit the fast growing market.

Mr. Anand Mahindra said: “I have always believed that India and China have unique and complementary strengths, which, when pooled together, can take on the world. We already have a successful joint venture with Jiangling Tractor Company. This JV between M&M and Yueda Groups will further combine Indian entrepreneurial and managerial skills with Chinese competitiveness and efficiency. I am sure this formidable combination will contribute substantially towards realising our ambition to be the leading tractor manufacturer in the global market”.
Mr. Anjanikumar Choudhari, President, Farm Equipment Sector, Mahindra & Mahindra Ltd., observed: “The inauguration of this joint venture is a significant step in our plans for the China market. The Jinma brand is extremely strong in the domestic China market, and the company is also one of the biggest exporters of tractors. Along with our current operation at Nanchang, we will have a much larger scale on which we plan to build up our business in China. We will have a product range going up to 125hp. We will also have a large manufacturing base which will be used to not only produce for the domestic market but also for low-cost manufacture for export”.

The tractor industry in China has grown from about 56,000 units in 2003 to 2,22,000 tractors in 2008, a CAGR of 32 per cent. The new agriculture policy introduced by the Government in 2004 has played a major role in this growth with a number of positive measures, including abolition of tax on agriculture.

The new JV is located in Yancheng city in Jiangsu Province. Its product portfolio comprises tractors ranging from 16hp to 125hp. MYYTCL will have a strong distribution network covering 25 provinces in China. It will also build on the existing export operations with a footprint in more than 60 countries, including the US, South America, Russia, Europe and Africa.

The Yueda is one of the top 100 business groups in China, has a turnover of $7.3 billion and has a presence in various sectors of the Chinese economy, including automobiles and tractors, coal and mining, infrastructure and real estate, textiles and garments, hotels and supermarkets. Over the last 29 years, Yueda has established itself as an international group with partnerships and joint ventures with reputed international companies like Kia Motors from Korea, French supermarket major Carrefour, Triumph from Germany, and Fuji and heavy construction machinery giant from Japan. The group employs more than 30,000 people.

SAME-Deutz-Fahr’s Ranipet plant expansion under way

The SAME-Deutz-Fahr Group (SDF), one of the world’s leading manufacturers of agricultural machinery, will be expanding its production plant at Ranipet in order to allow increased production volumes. SDF will also be introducing its premium brand Deutz-Fahr in the Indian market.

The current production capacity at the Ranipet plant where the Group already produces tractors of 40-70 hp, 3 and 4 cylinder engines, is 6,300 units per annum. The capacity expansion at Ranipet will increase the total covered surface up to 12,000 m2 and the total area to 132,000 m2 with a maximum production capacity of 11,000 tractors and 15,000 engines a year. In 2008 the total tractor production in Ranipet increased by 28 per cent to close at 4,000 units. This year the group plans to introduce a new 65-75 HP platform with a Tier III specification engines for the export markets.

The SAME-Deutz-Fahr Group, based in Treviglio, Bergamo (Italy), is one of the largest manufacturers of tractors, combine harvesters, engines, and agricultural machinery. Globally, products are made and sold under the SAME, Deutz-Fahr, Lamborghini, and Hurlimann brand names. Tractors range from 30 to 270 HP, while combines range from 125 to 450 HP, including conventional and rotary combines.

In 2008, the company, which employs around 2,700 people, achieved a turnover of 1,209 billion Euros. SAME-Deutz-Fahr owns 45.1 per cent of Deutz AG, one of the leading independent international manufacturers of diesel and gas engines.

The localization process in India of the 50-70 HP tractor platform was completed in 2008. Initially the tractors were produced exclusively for the export market (Europe, the US, Middle East and Africa). Now SDF will produce these tractors for the Indian market under the Deutz-Fahr brand.

India has the world’s largest tractor market with a total sales volume of 310,000 units in 2008. Due to structural changes in the Indian agriculture sector, there is consistent growth in the over 40 HP tractor segment which is likely to grow and represent 38 per cent (110,000 units) of the industry by 2015.

The continued development of India’s agriculture, combined with the growing demand for modern technology, allows the perfect opportunity for SDF to introduce its premium German brand, Deutz-Fahr tractors to Indian farmers and contractors.

The Deutz-Fahr brand which is targeted at progressive farmers in India will strengthen the position of SDF in India where the group will continue to sell its current products in the 40-6- HP range under the SAME brand.

“The production of the new 50-70 HP tractor range in Ranipet for both the domestic and export markets strengthens our presence in India, a strategic market in which the Group has been present since 1996, underlines Andrea Bedosti, Corporate Executive Vice President Sales, After Sales and Marketing. Thanks to the new product range, which offers important technological features, we expect to significantly increase our market share in India”.

Francesco Carozza, Chairman of SAME-Deutz-Fahr India, stated: “Deutz-Fahr has a long tradition that spans more than 80 years. The German Deutz-Fahr brand is known all over the world for its reliability as well as for its culture of service. Deutz-Fahr tractors, combines and forage harvesting equipment are the essence of technological research incorporated into pioneering products – machines that anticipate trends in modern farming and adapt to all kinds of operating conditions, in the name of total quality.”

Globally, in the last five years there are three major areas which are seeing increased agricultural activity for agricultural tractors and machinery. They are Russia, China and India. The total world market for tractors is 1.1 million. Today, India, China and Russia account for 50 per cent of the world tractor market.

Deutz-Fahr plans to focus in the next five years on these three countries which constitute for more than 60 per cent of the total tractor market. In order to compete in these three fast growing markets, it is important to develop a product range that will suit the local market.