VR Logo

In Focus: Fast Drive

M&M on course to strengthen its core business of automotive & farm equipment

Utility vehicle and tractor maker, Mahindra and Mahindra, is making significant inroads to further strengthen its core business of automotive and farm equipment.

Its visibility in the automotive segment in urban areas might be limited to the popular Scorpio and Bolero brands, but in rural and semi rural areas its presence shines through its tractors. Being the fifth largest tractor maker in the world, the company just got bigger with its acquisition of Punjab Tractors (PTL). The combined capacity of the two entities stands at 2.1 lakh tractors a year. But the benefit of the acquisition is more far-reaching than this, as PTL through its holdings in the group companies of Swaraj Enterprise will offer many opportunities for vertical integration.

The company's joint venture with Renault to manufacture five lakh cars in India has marked its entry into the passenger car segment.

For the uninitiated, the company through Mahindra Shubhlabh Services Limited provides supply chain services to organised retail (for both export and domestic markets) for fresh fruits and vegetables as well as to the food processing industry. Leveraging on this presence in the agro business sector, the company is expected to partner a retail player. The company has managed to keep up the pace of growth and avoid stagnancy in operations in spite of achieving significant success in core operations. The new acquisitions and entry into new markets will plump up the revenues of M&M. While a lot of this will go into re paying the acquired debt, over the long run investors can look forward to a significant value add.