M&M vice-chairman and managing director Anand Mahindra (centre) with chief operating officer Gautam Nagwekar (left) and director (corporate affairs) Bharat Doshi in Mumbai on Monday. (Fotocorp)

Mumbai, Aug. 18: Mahindra & Mahindra (M&M) today entered into a joint venture agreement with China’s Jiangsu Yueda Yancheng Tractor Manufacturing Co Ltd.

According to the deal, the assets and liabilities of the Chinese firm will be transferred to the joint venture. The value of net assets transferred will be $50 million.

M&M will invest around $26 million to hold a 51 per cent stake in the joint venture, through its subsidiary Mahindra Overseas Investment Company (Mauritius) Ltd.

This will be M&M’s second tractor venture in China. It is present in the Chinese tractor market through Mahindra China Tractor Co following the acquisition of an 80 per cent stake in Jiangling Tractors in 2004.

Anand Mahindra, vice-chairman and managing director of the Mahindra group, said the combination would help realise the group’s ambition to be a leading tractor manufacturer, globally.

According to Anjanikumar Choudhari, president (farm equipment sector) of M&M, the company plans to have a large manufacturing base in China which will be used not only for the local market but also for exports.

“Along with our current operation at Nanchang, we will build our business in China on a larger scale. We will have a product range going up to 125HP. The combined distribution network of our operations will give us a much larger presence in the market,’’ he said.

The tractor industry in China has grown to 2,20,000 units in 2007 from about 56,000 units in 2003, a compounded annual growth rate of 40 per cent.

Yancheng Tractor, located in Yancheng city of Jiangsu Province, is a state-owned enterprise. It sells tractors under the brand name of Huanghai Jinma, the third largest tractor brand in China in terms of volumes in 2007.

The company’s product portfolio comprises tractors ranging from 16HP to 125HP.

Yancheng has a strong distribution network covering over 25 provinces in China. The company is also a leading exporter, with a footprint in more than 60 countries, including the US, South America, Russia, Europe and Africa.

Mahindra China Tractor manufactures vehicles for the Chinese market and exports to the US and other nations. M&M has a 100 per cent subsidiary — Mahindra USA — with three assembly plants catering to the American market.

Hummer pursuit

M&M today said it was not pursuing the Hummer brand, which General Motors has put on the block.

The farm equipment and utility vehicle major also said it was in talks with Chrysler to settle a dispute over the grill design of its SUV Scorpio.

“I’d like to categorically state that we are not pursuing Hummer,” Mahindra said, adding that the company was pursuing its own products, which are eco-friendly.

General Motors has decided to sell off the Hummer brand as the sales of the vehicle reported a sharp decline.