01 April 2016 06:43:46 IST

M&M buys 35% stake in Finnish harvester company for ₹135 cr

Pawan Goenka, Execitive Director, M&M Ltd with Kairas Vakharia, Sr. VP & Head Farm Machinery, MM Ltd at a press conference in Mumbai (Paul Noronha)

Keen to build a full product line of farm equipment that goes beyond tractors

Mahindra & Mahindra has acquired 35 per cent stake in Finland-based harvester maker Sampo Rosenlew for €18 million (₹135 crore).

The family-owned Sampo has a turnover of €93 million with combine harvesters accounting for 70 per cent of net sales. The Finnish company exports about 90 per cent of its production to over 50 countries. The company has capacity to manufacture 1,300 harvesters per annum.

The deal is expected to be closed by June end.

Pawan Goenka, Executive Director, M&M, said the company is putting in place a strategy to build a full product line of farm equipment that goes beyond tractors. With labour cost increasing steadily in India, he said there is huge scope for mechanisation of farming in India.

On the company's investment when the global economy is teetering, Goenka said investment decisions are made not by looking into current economic condition but on the basis of future business opportunities and economic prospects.

The sale of self-propelled harvesters in India is estimated at 2,000 units per annum, while in China, it is about 40,000-50,000 units a year. With a low base, the country has better prospects in farm mechanisation. A basic harvester costs about ₹18-20 lakh in India.

Kairas Vakharia, Business Head Farm Machinery, M&M, said the company will put up a research and development centre in Finland to develop cotton and sugarcane harvesters, besides rice transplanters which can be used in India and Asian countries. This apart, he said with oil prices plunging some of the oil dependent countries which have fertile land are now shifting their focus on agriculture and this will open up new markets.

Sampo has a joint venture company in Algeria which recorded revenue of €€45 million in the financial year 2014-15. M&M has been growing farm mechanisation business largely through acquisition.

Last May, the company acquired 33 per cent in Mitsubishi Agriculture Machinery Co for $25 million (₹160 crore). The deal with Mitsubishi was to jointly develop products for the global tractor and agri-machinery market, apart from improving cost competitiveness though joint procurements.