Mahindra enters global combine harvester business, joins hands with Sampo Rosenlew

Mahindra & Mahindra today announced its foray into the global combine harvester business, by entering into a strategic partnership with Finland-based combine harvester company Sampo Rosenlew.

Under the transaction, which is expected to close by June 2016, Mahindra will acquire a 35% equity stake in Sampo Rosenlew worth 18 million euros (Rs 135 crore). Both the companies will develop new range of combine harvesters for emerging markets to grow their business globally.

Commenting on the development, Dr Pawan Goenka, executive director, M&M said, “Today, Mahindra is the world’s leading tractor company by volume, with an on ground presence in India, USA, China and Japan, besides other export markets. We are now putting in place a strategy to build a full product line of farm equipments that go beyond tractors."

Mahindra had also partnered with Mitsubishi Heavy Industries in May last year. The deal worth US$ 25 million (approx Rs 160 crore) was Mahindra's entry into the agricultural machinery field sector.

“The Mitsubishi and Sampo stake buy-in is in line with our strategy to move beyond tractors in the Farm equipment operations. Harvesters are set to play a crucial role in the mechanisation of Indian farms. Therefore, we see a huge opportunity in the harvester business globally and in India,” added Goenka.

Together with its existing strategy in core markets, Sampo will also develop a new range of combine harvesters for developing markets and for specialty crops. Mahindra and Sampo will jointly focus on Asia, Africa and Eurasian Economic Union countries.

Rajesh Jejurikar, president and chief executive, Farm Equipment & Two Wheeler, M&M said, “Sampo Rosenlow will enable us to grow in the global combine harvester business. The two companies will work closely towards taking Sampo’s combine harvesters to new markets, including India.”

“Our acquisition strategy has been to target low ticket sizes and low risk players,” added Jejurikar.

In FY2014-15, Sampo Rosenlow had a standalone revenue of 93 million euros. The company is also a JV partner in a combine harvester company in Algeria, which had revnues of 45 million euros.

“With Mahindra we have a possibility to grow and make Sampo Rosenlew a truly global player in the agricultural machinery business as well as enter into the new market areas in which our own resources would not be sufficient. Working in partnership with leading agricultural machinery manufacturers has been the way of working for Sampo Rosenlew for many years.Already today we handle our distribution, after sales services and part of the joint production with our partners in the Nordic markets, Europe and North Africa. This strategic partnership with Mahindra & Mahindra is a natural step towards the world’s fastest growing markets in Asia, Middle East and Africa together with the strongest possible partner. With this collaboration we aim to increase the manufacturing volumes in combine harvesters and components in Pori," said Jali Prihti, CEO of Sampo Rosenlew.

The current global harvester market is around 161,000 units, which is expected to grow at a CAGR of 7% by 2023.