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MM launches new high horsepower tractor Arjun Novo

CNBC-TV18’s Farah Bookwala Vhora, who was in Chennai at the company’s R&D centre, caught up with Dr Pawan Goenka to find out more about the new M&M product.

India’s largest tractor maker by volumes, Mahindra & Mahindra ( M&M ) today launched its most technologically advanced tractor from its new high horse power platform, aimed at increasing mechanization in agriculture. The 57HP Arjun Novo will replace M&M’s 50HP model Arjun 605, and is priced at Rs 7.35 lakh ex-showroom Pune. Arjun Novo is the first in a series of tractors that M&M is looking to launch from its new platform, which was set up with an investment of Rs 300 crore.

CNBC-TV18’s Farah Bookwala Vhora, who was in Chennai at the company’s R&D centre, caught up with Dr Pawan Goenka to find out more about the new M&M product.

Below is a verbatim transcript of the interview

Q: What is your expectation from the new tractor?

A: Arjun Novo is actually replacing Arjun, which is the highest selling tractor in that segment. So it is not like we are entering a new segment. In fact, the reason we have launched Arjun Novo is, as a leader, we feel that it is our duty to constantly reinvent new products and replace our products ourselves rather than making those products become noncompetitive. That is the reason Arjun Novo is launched.

There are two expectations that we will have from it. The market share of 48 horsepower plus in India today is about 16 percent and we hope that Arjun Novo will help to grow that market share from 16 percent to 20-22 percent. India even now even though this segment has grown well in the last 10 years, even now has the smallest tractor users on an average than any other major country in the world.

We hope that farmers will see it fit to buy larger tractors because larger tractor means more productivity, more convenience for the farmer and therefore this tractor will give good RoI to the farmers.

We do expect that since this tractor we believe is one of the best technology tractors that has been launched in India in this segment, we do hope that we will be able to grow our market share also along with growing the market itself.

Q: What is your export strategy on Arjun Novo looking like? In a recent interview you had said that you would be looking at markets like Brazil and Turkey very closely. Is this to say that Arjun Novo would be exported to these markets?

A: Yes we do expect Arjun Novo to be exported to many markets. But unlike cars, in tractor each market has very different requirement in terms of what kind of duty cycle the tractor is put through, its styling expectations will be different in different markets. So we will have to develop the platform variants for each of the markets that we want to go in. So we expect to start exporting Arjun Novo in next six months from now and probably about two years we will complete the launch of this platform in various markets.

M&M stock price

On August 20, 2014, at 15:27 hrs Mahindra and Mahindra was quoting at Rs 1357.05, down Rs 17.5, or 1.27 percent. The 52-week high of the share was Rs 1380.30 and the 52-week low was Rs 741.50.

The company’s trailing 12-month (TTM) EPS was at Rs 60.11 per share as per the quarter ended June 2014. The stock’s price-to-earnings (P/E) ratio was 22.58. The latest book value of the company is Rs 272.84 per share. At current value, the price-to-book value of the company is 4.97.


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