Mahindra & Mahindra start production at Andhra tractor plant

Zaheerabad (Andhra Pradesh) : Automotive major Mahindra & Mahindra Wednesday launched its tractor manufacturing plant with an annual capacity of one lakh tractors, claimed to be the biggest in Asia.

Andhra Pradesh Chief Minister N. Kiran Kumar Reddy inaugurated the Rs.300 crore plant in the presence of some of his cabinet colleagues and Anand Mahindra, chairman, Mahindra Group.

The plant will initially manufacture 1,000 tractors per month and achieve the ultimate capacity in four years. The plant has come up over 80 acres in a short span of 18 months in this town of Medak district, 110 km from Hyderabad.

“This is a very proud moment and a significant milestone for us,” said Mahindra. He described the plant as part of Mahindra & Mahindra’s philosophy of creating shared value.

The plant has 280 employees, which will go up to 1,600 with full production.

Seven suppliers of Mahindra & Mahindra have come forward to set up their operations with three of the suppliers bringing in an investment of Rs.20 crore each. The other suppliers are also likely to make similar investments.

Pawan Goenka, president, automotive and farm equipment sectors, Mahindra & Mahindra Ltd., said more suppliers would set up their operations on 100 acres of land allotted by the state government. He said the place could accommodate at least 15-20 suppliers.

The plant will manufacture all models under ‘Mahindra’ and ‘Swaraj’ brands of tractors. The company, which sold 121,730 tractors in the domestic market last year, has a market share of 40 percent. It also exports 11,000-12,000 tractors.

Zaheerabad plant will also explore the possibility of exports. Goenka, however, admitted that its location was a disadvantage for exports as there was no port nearby.

Minister for Major Industries J. Geeta Reddy invited the company to set up its proposed four-wheeler plant in passenger and load carrier segments at Zaheerabad.

“We will discuss the proposal with the government. It is too early to say anything,” Goenka said about the investment they would be making in the proposed plant.

Mahindra & Mahindra, India’s largest maker of sports utility vehicles (SUVs), has sought rollback of three percent hike in excise duty on SUVs. Goenka told reporters that they have requested the government to reconsider the hike in excise duty proposed in the union budget.

“We don’t know whether they will consider this or not but obviously for a segment which we are in this is not something we are happy about,” he said.

To another query, he said lack of sops for electric cars would have an impact on volumes as the prices of the cars would be too high.