Mahindra & Mahindra buys Turkish firm's tractor, foundry units for Rs 800 crore

Mahindra & Mahindra (M&M) has signed pacts to acquire Turkey-based Erkunt Group's tractor manufacturing and foundry businesses for Rs 800 crore.

The company will acquire 100 percent of the share capital of Erkunt Traktor Sanayii A.S for Rs 478 crore and at least 80 percent of Erkunt Sanayi A.s, which is the foundry business.

Erkunt Traktor Sanayii A.S holds 35 percent stake in Erkunt Sanayi A.S. The transaction is expected to be closed by November 30,
2017.

The Turkish entity is one of the country's top five tractor makers. This would be M&M’s second tractor acquisition in Turkey this year. In January 2017, it had acquired Turkish company Hisarlar.

Turkey is Europe's largest tractor market and globally commands a 3 percent market share in the agri-machinery industry.

Mahindra is expecting to access the farm equipment market, in which Erkunt Traktor operates, through this acquisition.

The profit-making Turkish entity earned a revenue of 314 million Turkish Lira against 4,700 sold tractors in the calendar year 2016.

Erkunt Traktor markets tractors with the brand name 'Erkunt' in Turkey and exports to the foreign market with under the brand 'Arma Trac'.

The Erkunt Foundry, in which Mahindra got 80 percent of the share capital, operates in the casting and machining sector. It has the capability to manufacture engine blocks, cylinder heads, and transmission cases.

The Foundry also gets 75 percent of its revenue from exporting to the European Union, United Kingdom, and some other countries.

The acquisition is part of M&M's plan to double its global revenue to USD 5 billion by 2019. It is targeting 50 percent revenues from global markets by 2019.

On Tuesday, the company  unveiled the country's first driverless tractor. The tractor can auto-steer and is able to detect and avoid obstacles. It is also capable of making automatic headland turns, automatic lift and drops and make emergency stops.