Mahindra acquires tractor company in Turkey for Rs800 crore

Mahindra acquires tractor company in Turkey for Rs800 crore

The acquisition of Erkunt Traktor Sanayii AS will provide Mahindra access to Turkish agricultural machinery market, the fourth largest globally. 

This association with Erkunt on the back of the Hisarlar acquisition earlier in the year will help in growing Mahindra’s farm equipment business in the strategic market of Turkey. With two strong brands such as Mahindra and Erkunt coming together and with a wider combined product portfolio, this association will offer complete mechanisation solutions to the diverse needs of Turkish farmers, thereby creating a more significant presence in Turkey. The association will also build an export business especially in the neighbouring markets of the Middle East, CIS and Europe.

Commenting on the development, Dr. Pawan Goenka, Managing Director, Mahindra & Mahindra Ltd. said "At Mahindra’s Farm Equipment Sector, our strategy is to globalise aggressively and also expand our portfolio to include various new categories of tractors and farm machinery. Turkey is a very important market in our globalisation journey and we wish to participate in its entire agri mechanization landscape. The acquisition of Erkunt will enable Mahindra to expand its footprint in the world’s 4th largest tractor market”.

Rajesh Jejurikar, President, Farm Equipment Sector, Mahindra & Mahindra Ltd. said, ““Erkunt is a strong local Turkish brand that has grown very rapidly over the last decade, by expanding its product range. We look forward to collaborate with the Erkunt leadership team to bring synergy and expand our footprint in Turkey”.

Mahindra will also acquire a foundry unit, Erkunt Sanayi A.S., which is a full service provider, from castings to machining. The Foundry Unit focuses on engine blocks, cylinder heads and transmission cases and has a strong customer portfolio including JCB, MAN, Ford and Deutz. The foundry unit had a revenue of USD 47 million during 2016.

About Erkunt Traktor Sanayii A.S.

Erkunt, incorporated in 2003, is the 4th largest tractor brand in Turkey with a market share of 6% and is 100% owned by the Armagan family. It is a key player in the Turkish tractor industry with a wide product portfolio from 55 to 110 HP suitable for diverse farming needs.

The company’s revenue in the calendar year 2016 was USD 88 million and it sold around 4,700 tractors during that period. Exports constitute around 7% of sales. The company has its production facility in Ankara, Turkey and employs a total of around 355 people. The company has a strong brand image in Turkey and is supported by a distribution network of 95 dealers, with 326 authorised service locations across Turkey.

With government focus on agriculture and mechanisation, Turkey has moved up its rank to 7th place in the world in terms of agricultural output. Turkey is a large market for tractors, harvesters, implements and other machinery with total industry size of approximately USD 3.5 Bn.

It is the 4th largest tractor market globally in terms of volume. In the year 2016, around 71,000 tractors were sold in the domestic market. During the period 2009-15, on an average, the tractor market stood at 48,450 units.

Apart from imports in the harvesters segment, farm equipment demand in Turkey is primarily met from domestic production. In addition, a significant proportion of agricultural equipment manufactured in Turkey is exported to Central Asia, the Middle East and Africa.

 

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