M&M tractors set for Pak journey

Company signs MoU with Saigal family for exports of CKD kits.

Mahindra & Mahindra (M&M), the country's largest farm equipment maker, is all set to cross the Line of Control. M&M has signed a memorandum of understanding with the Saigal family of Pakistan for exporting tractors to that country.

This comes two days after Tata Motors signed a technical assistance agreement with Karachi-based Afzal Motors to export completely knocked down (CKD) vehicles to Pakistan.

Sources close to the development said the Saigal family, which was into the automobile business, would assemble tractors in Pakistan after importing CKD kits from M&M, once the alliance materialised.

When contacted, an M&M spokesperson confirmed that the company had signed an MoU with the Saigal group. The company will also conduct a feasibility study, she added.

The M&M share fell 0.77 per cent today on the Bombay Stock Exchange to close at Rs 500.55, down from yesterday's closing of Rs 504.20.

Sources said M&M would take a little while to finalise other details, such as a timeframe for the exports to begin, the number of tractors to be exported initially and product specifications.

They added that M&M's proposed entry into Pakistan would depend on the policy of the local government.

An arrangement with a local player is a must for exporting tractors from India to Pakistan as Pakistani laws do not permit direct export of the product.

M&M exports tractors to the US, European countries and Australia. In the first half of the current year, tractor exports grew 35 per cent to 3,262 units.

In the domestic market, the company sold 36,109 tractors during the first half of the current year, 37 per cent higher than 26,371 units sold in the corresponding period of the last year. M&M's share in the domestic tractor market rose to 32 per cent in the first half of the current year from 26 per cent of the corresponding period of the last year.

The company posted 50 per cent growth in its farm equipment business in the first half of financial year 2006. It posed a profit of Rs 139 crore over a total revenue of Rs 1,297 crore in the first half of the current year. During the period, profit rose 107 per cent while revenue grew 50 per cent.