Seeing huge potential and growth in the Chinese agricultural market, India’s Mahindra &Mahindra's farm equipment sector has announced another $40 million investment in that market, according to CNBC-TV18’s Swati Khandelwal Jain. Following is a verbatim transcript of her comments on CNBC-TV18.
“M&M’s farm equipment arm has announced further investments into China along with its joint venture partner Yueda Group. Together they are making investments to the tune of Rs 175 crore out of which Mahindra will invest about Rs 90 crore since it has a 51% stake in the company.
“These investments will essentially go in setting up an engine manufacturing facility in China to set up an R&D center and also to modernize the existing tractor facility in China. The company says that the engine manufacturing facility will be up and ready in 2011 and will initially manufacture 40,000 units, which will essentially be used for the domestic market. But some of it will also be sold to some OEMs.
“Anjanikumar Choudhary, president, Farm Equipment Sector, M&M said, ‘If you just look at Mahindra & Mahindra Ltd. in the first half of this year because I can quote that because that is a publicly announced figure. We sold about 84,000 tractors in 6 months. I believe that has already made us number one in the world as a single company without counting subsidiaries.’
“The Indian tractor industry has been growing at a rate of 12-15% in the first 6 months in spite of bad monsoon. But if you talk about the Chinese tractor industry, it is actually the fastest growing with a CAGR of 40% per annum.
“If you just compare the figures to 2003, the market was just about 56,000 units and today it is over 3 lakh units [300,000] and also the fact that the government of China has been giving quite a few subsidies and incentives to the farm equipment sector.
“If you see this year itself the government has given subsidies to the tune of Rs 14,000 crore. There is a huge potential for companies like Mahindra & Mahindra to come and invest in China.”