Mahindra & Mahindra, the global market leader in the tractor segment, may consider spinning off its farm machinery business in the hope of capitalizing on future opportunities in the automotive sector.
Mahindra Group Managing Director and CEO Anish Shah said Hindu Business Line“We may look at a spin-off of the farm machinery business because this is an area where we see a lot of potential for growth, and a very different mindset may be required to drive that growth,” Which can actually be 10X growth in 3-5 years, possibly even more. But it’s not final yet. It’s only for farm equipment and farm machinery. We’re just about to end the farm business. Not trying.”
Years later, Based in Mumbai M&M has strengthened its position in the non-tractor, farm equipment and machinery business where it partnered with Japanese and European companies to manufacture tractor equipment, harvesters and rice transplanters. M&M has bought controlling stakes in Turkish companies. It also manufactures and sells appliances under its own brand. Mitsubishi-Mahindra’s Indo-Japanese joint venture includes its 33% stake in Power Tillers and Mini Rotors.
Currently, M&M’s farm equipment business accounts for 29% of total gross revenue. The farm equipment segment grew by 2% in the December 2021 quarter compared to the same quarter last year. Its automotive segment, which includes SUVs, trucks, buses and three-wheelers, generates the highest revenue for M&M, accounting for 41% of its total gross revenue.
In the past, analysts have suggested M&M divest its farm equipment business, including tractors, and make M&M a fully automotive company. However, the tractor business has helped the company to overcome the decline in demand for passenger vehicles on several occasions.
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