Mahindra suppliers to setup new production facilities

India’s own biggest car manufacturing company, Mahindra & Mahindra has reportedly said that seven of its suppliers have decided to setting up manufacturing plants. For the huge monetary requirement of establishing a production facilities the Mahindra suppliers are ready to investment of a whopping Rs150 crore in the surrounding area of a tractor factory that the company opened in Andhra Pradesh 6th of March, 2013.

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Mr. Pawan Goenka, president of the Mahindra & Mahindra automotive and farm equipment divisions, said that each of these seven Mahindra suppliers will invest between Rs. 15 crore and Rs. 20 crore in the production unit, and for this they have already sought registration as well.

The government of Andhra Pradesh government has allocated 100 acres to Mahindra & Mahindra for setting up a supplier park in the Mahindra tractor plan’s area in Zaheerabad in Medak district. The supplier manufacturing facilities will be set up and running in about a year’s time. Moreover, these plants will also generate considerable local employment, Mr. Goenka added.

Mahindra & Mahindra has invested Rs. 300 crore in this recently opened tractor facility, which is said to be the country’s largest plant. This production facility meant for the production of only tractors is spread across 80 acres in Zaheerabad in Medak district, which is about 100 km from state capital of Hyderabad. This Mahindra plant located at Zaheerabad will have the capacity to produce over 100,000 tractors on an annual basis.

Mr. Pawan Goenka informed that the plant which has great production capacity is producing 1,000 tractors a month at present, due to the demand dip that has occurred owning to the slumped economic growth.

Mahindra is hoping that the next year will come with a much better situation than the present year. In the current year the tractor industry has suffered a decline by over 2%, Goenka added.

Goenka also threw more light on the issue by saying that Mahindra & Mahindra is expecting the tractor market to improve by 5 to 7 percent in the year 2014. If and when the demand for tractors increases in the domestic market, this new plant at Zaheerabad can produce 8,000 tractors per month when working at full capacity. However, Goenka said that evaluating the kind of growth that the company is forecasting, it will take around four years for the company to get to the full capacity.

Mahindra & Mahindra is also the world’s largest tractor manufacturer by volume and makes units ranging from 15 to 85 horsepower. The company recorded a total sale of 14,861 units in the month February 2013 as compared against the sale of 15,316 units in the same month in 2012.

Meanwhile, as Mahindra continues to grow in the passenger car market in India, the company is planning to come up with very fresh models in the SUV segment to boost it sales figures even further. As production capabilities are needed to be increased, the company will definitely benefit from the setting up of the new plants by its suppliers.