M&M to raise $200 million to fund expansion
15 Feb 2006
The board of tractors and utility vehicles major Mahindra & Mahindra has approved plans to raise up to $200 million in long term funds from the international or domestic markets. The company may also retain up to 15 per cent, or $35 million, of oversubscriptions.
The funds would finance the company's export initiatives besides potential domestic and overseas acquisitions. The company is also planning more investments in technology and product development.
M&M has been increasingly focusing on export markets after the success of its SUV model Scorpio. The company has tied-up several marketing arrangements to sell passenger vehicles in Europe, South East Asia and Middle East.
The company has more aggressive plans for the tractor business. The company is one of the market leaders in the US for small tractors. M&M has bid for Tractol of Romania, a tractor manufacturer in East Europe, which is expected to be finalised soon. The company is aiming to become the world's largest tractor manufacturer over the next decade.
M&M has also tied up with global auto companies to expand into various segments. It has formed a joint venture with Renault of France to launch a mid-size sedan car 'Logan' in India. Logan is a success in most price conscious markets of East Europe and is expected to be launched in 2007 in India.
M&M has also entered into a JV with International Truck and Engine Corp of US for commercial vehicles. The US company is one of the largest truck manufacturers in the US. M&M transferred its commercial vehicles division to the JV. This JV is also expected to increase component exports by M&M.
The company had reported a net profit of Rs233.46 crore for the third quarter ended 31 December 2005 on a stand alone basis as compared to a profit of Rs133.19 crore for the prior year quarter. Total revenues for the quarter increased to Rs2,247.46 crore from Rs1,794.52 crore during the same quarter of previous year.
M&M closed at Rs607.5 (up 1.72 per cent) on the NSE yesterday.