New Delhi: Mahindra & Mahindra Ltd, India’s biggest maker of tractors and sport-utility vehicles, said it plans to bid for a stake of about 43% in Punjab Tractors Ltd, to tap the country’s rising demand for farmyard equipment.
The company’s board has approved a bid, Mumbai-based Mahindra said in a statement to the Bombay Stock Exchange today, without elaboration. Actis Capital LLP, a London-based private equity fund, and the Burman family, owner of Dabur India Ltd, are both planning to sell stakes in Punjab Tractors, according to media reports.
Mahindra joins Ashok Leyland Ltd, India’s second-largest maker of trucks and buses, in planning a bid for Punjab Tractors, the country’s fifth-largest tractor maker. Tractor sales in India, Asia’s fourth-biggest economy, may grow 6% this year, as the government focuses more on the farm sector, according to the 2006 Indian Automotive Mission Plan.
Actis Capital owns 29.3% of Punjab Tractors and the Burman family has a 14.2% stake, according to Punjab Tractors’ website. Both may sell stakes to the same buyer, a business daily said on 7 February.
Mahindra shares fell 8.4% to Rs706 at 3:13 p.m. in Mumbai, after dropping as much 9.2%. Shares of Punjab Tractors fell 1.2% to Rs318.15, after losing as much as 3.7%.
Indian tractor sales grew 18% to 293,000 in the year ended 31 March 2006, according to government estimates.