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Mahindra Farm Equipment Enters Turkey

Acquires a 75.1% equity stake in Turkey-based Hisarlar Makina Sanayi ve Ticaret Anonim Şirketi

Enters Turkey; ranks amongst the largest farm equipment markets globally

Mumbai, January 20, 2017: Mahindra & Mahindra Ltd (M&M Ltd), a part of the USD 17.8 billion Mahindra Group, headquartered in Mumbai, India, 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.

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 Ltd. 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 Ltd. 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".

About Hisarlar Makina Sanayi ve Ticaret Anonim Şirketi

Hisarlar, incorporated in 1977, is a key player in the agriculture machinery industry, tractor cabins and components for off highway machinery.

The company has been owned primarily by the Turker family with equity participation from Darby, a private equity fund which is part of the Franklin Templeton Group, and the European Bank for Reconstruction and Development (EBRD), a leading institutional investor in Turkey.

The company's revenue in 2015 was 208 million Turkish Lira. Exports constitute 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. During the period 2009-15, on an average, the tractor market stood at 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.

The Transaction
Mahindra & Mahindra Ltd. will invest 71 million Turkish Lira (equivalent to around USD 19 million at an exchange rate of 3.80 Turkish Lira per USD) in Hisarlar as fresh equity infusion into the company, which will give M & M Ltd. a 75.1% equity stake. Mahindra & Mahindra will have majority in the board and control the management of Hisarlar, post its investment into the company. As part of the transaction, EBRD is increasing its shareholding to 18.7%, and will be entitled to nominate a Board Director, with the founding Turker family retaining a 6.2% stake.

About Mahindra 
The Mahindra Group is a USD 17.8 billion federation of companies that enables people to rise through innovative mobility solutions, driving rural prosperity, enhancing urban living, nurturing new businesses and fostering communities. It has a leadership position in utility vehicles, information technology, financial services and vacation ownership in India and is the world's largest tractor company, by volume. It also enjoys a strong presence in aerospace, agribusiness, components, commercial vehicles, consulting services, defence, energy, industrial equipment, logistics, real estate, steel, and two wheelers. Headquartered in India, Mahindra employs over 200,000 people across 100 countries.