M&M plans to scale up tractor output by 60%

Mahindra & Mahindra (M&M), India’s largest tractor maker, plans to scale up its production capacity by over 60% in two years to cash in on the growing rural demand, according to a senior official.

The company, which sells Mahindra and Swaraj brands of tractors, will set up a one-lakh capacity unit with an investment of at least `600 crore, said the official who did not wish to be named.

M&M produces one lakh units of the Mahindra brand a year at Rudrapur, Kandivli, Nagpur and Jaipur plants and 60,000 units of Swaraj at its Mohali unit. The expansion will take place in two phases, said the same official. The new unit may come up in Tamil Nadu, he added.

Pawan Goenka, president, automotive and farm-equipment sector, declined comment on the size of the proposed expansion and the required investment.

“We are constrained by capacity. We are scouting for a new location. This plant should be ready by 2012,” he added. M&M will produce tractors having capacity between 30 and 50 HP, the category which suffered a volume dip in the recent past.

With a good monsoon and a strong rural liquidity, M&M expects tractor volume to grow 20% this fiscal. It recorded a 40% volume growth at 1.55 lakh units last year. M&M, which has put Punjab Tractors back on the rails after acquiring it three years ago, enjoys a 42% share of the Indian tractor market. For the period April to July, 2010, M&M’s sales stood at 61,250 units, a growth of 13%.

M&M has become the world’s number-one tractor company by selling 1.6 lakh tractors in 2009, overtaking John Deere of the US. M&M also sells tractors in foreign countries through associate companies.