Mahindra and Mahindra group today said it will exit from its China joint venture for tractor business, Mahindra Yueda Yancheng Tractor Company, by selling entire stake for RMB 82 million (nearly Rs 80 crore).
The Indian conglomerate has plans to independently operate in China.
Mahindra and Mahindra holds 51 per cent stake in the Chinese JV through its wholly owned subsidiary Mahindra Overseas Investment Company (Mauritius) Limited.
"Mahindra Overseas Investment Company (Mauritius) Limited (MOICML)... has agreed to sell its entire shareholding of 51 per cent in Mahindra Yueda Yancheng Tractor Company Ltd (MYYTCL), China. Upon receipt of requisite regulatory approvals and completion of other formalities, MYYTCL will cease to be a subsidiary of MOICML...," Mahindra and Mahindra said in a regulatory filing.
The company is selling entire stake to Jiangsu Yueda Investment company (2 per cent stake), Jiangsu Yueda Group (39 per cent) and Yan Bingde (10 per cent) for an aggregate amount of 82 million RMB or about Rs 80 crore.
The equity transfer for the deal has been executed today and the deal is expected to be closed by end of this month.
"This development would also mark the beginning of a new journey for Mahindra in China, as the company reviews its plans to explore the wider opportunities which would be available to Mahindra with its recent global initiatives in the farm machinery space," Mahindra and Mahindra said in a statement.
Mahindra said that through recent acquisitions it has expanded farm machinery product portfolio beyond tractors to rice transplanters, harvesters etc.
"The company will evaluate the market opportunity for introducing these products into China and explore opportunities to create a global supply chain," it said.
Turnover of MYYTCL for the year ended December 2016 stood at 339.89 million RMB and its net worth was 88 million RMB.
Shares of Mahindra and Mahindra closed at Rs 1,346.35 a unit, down by 3.1 per cent compared to previous close.