M&M expands European footprint, acquires Turkish farm equipment manufacturer Hisarlar

Mahindra & Mahindra (M&M) today announced its foray into Turkey, through the acquisition of Hisarlar Makina Sanayi ve Ticaret Anonim Şirketi (Hisarlar), a farm equipment company based in Turkey.

Mahindra & Mahindra Ltd. will invest 71 million Turkish Lira (equivalent to around Rs 120 crore/US$ 19 million at an exchange rate of 3.80 Turkish Lira per US$) in Hisarlar as fresh equity infusion into the company, which will give M&M a 75.1% equity stake. 

Under the transaction, which is expected to close by April 2017, Mahindra will acquire a 75.1% equity stake in Hisarlar. The association will help in growing the farm equipment business in Turkey and Europe. The balance shareholding will be with European Bank for Reconstruction and Development (EBRD), 18.7%; and the founding Turker family, 6.2%. Further, as part of the transaction, Darby Converging Europe Fund III will exit its investment.

Commenting on the development, Dr Pawan Goenka, managing director, Mahindra & Mahindra, said: "Mahindra is the world’s No 1 tractor company by volume, with an on-ground presence in India, USA, China and Japan, besides many other export markets. Our strategy going forward is to globalise aggressively and also expand our portfolio to include various new categories of farm machinery. This acquisition is an important milestone in our globalisation journey."

Rajesh Jejurikar, president and Chief Executive, Farm Equipment & Two Wheeler, M&M, said, “Hisarlar is a market leader with 45% market share in soil preparation equipment in Turkey. The acquisition of Hisarlar will enable Mahindra to expand its footprint in Turkey and Europe, making this entity a global manufacturing base for various farm implements and tractor cabins”.

Hisarlar also makes Turkar 4x4 off-road light truck

Interestingly, in addition to manufacturing safety cabs for tractors and heavy equipment, agricultural machinery and metal fabrication products, Hisarlar also manufactures the Turkar, Turkey’s first 4x4 off-road light truck (pictured below) which is produced for a range of applications. 

In 2015, Hisarlar posted revenues of 208 million Turkish lira with exports constituting around 35% of sales. The company has two production facilities in western Turkey and employs a total of about 820 people. Hisarlar is the leader in the soil preparation category of implements with a 45% market share in Turkey. The company has strong brands in this segment, supported by a distribution network of 85 dealers across Turkey. Besides agricultural machinery, the company manufactures tractor cabins and industrial components.

Turkey is the largest tractor market in terms of production and sales within Europe. Average annual tractor sales between 2009-2015 were 48,450 units. Turkey also has a 3% market share in the agri-machinery industry globally. Agricultural mechanisation in Turkey is growing and the country is also an important market for combine harvesters.

Apart from some imports in harvesters, farm equipment demand in Turkey is primarily met from domestic production. In addition, a significant proportion of agricultural equipment manufactured in Turkey is exported to Central Asia, the Middle East and Africa.