Success of a Merger

Hansavivek MAHINDRA AND MAHINDRA has fared so well during 1978-70 that the directors have recommended issue of bonus shares on a one-for-one basis be- sides raising equity dividend from 18 per cent to 20 per cent. The enhanced distribution is very well covered by earnings and the director have recorded their intention to pay at least 14 per cent on the expanded capital after the bonus issue. These results cover the first full operating year after the merger of the business of International Tractor Company of India with the company. Substantial increases in product ion and sales have resulted in a marked improvement in profitability. The directorssay that a more effective technical co-ordination between the two facilities i$ showing efficiencies all around and providing flexibility in the planning of production to suit demand needs. Demand for the company's products continues to be strong. Deeper penetration into new market areas by the Jeep range of vehicles and a growing and more efficient sales and service organisation for tractors holds promise of further growth in the years to come. The automotive division achieved the highest-ever production and sales since inception of the company, despite impediments caused by restricted availability of vendor supplies and power shortage. The company produced 14,890 vehicles and sold 14,910 as against 11,349 and 11,440, respectively, in the previous year. It has plans to attain full licensed capacity of 25,000 vehicles in 3 to 4 years. Government has in principle approved of the company entering into a technical collaboration agreement with Automobiles Pedgeot of France, for manufacture of its latest model XDP 4,90 diesel engine in India for Mahindra vehicles. The company proposes to set up a joint venture in Greece in association with balkania K Zachampoulos of Athens for manufacture and as sembly of jeep vehicles and trucks, mainly from ckd packs to be supplied from India. Initially, it is proposed to assemble 400 vehicles per annum, increasing in three years' time to 800 vehicles. M and M's shareholding in the proposed company will not exceed 40 per cent and it expects to earn a reasonable dividend on investment besides royalty from the, Greek company. The International Tractor division's production and sales during the year were 9,325 and 9,248 units compared to 5,750 and 5,866 units, respectively, produced during the previous year. With the increase in the worldwide demand for vehicles, the automotive division earned foreign exchange to the tune of Rs 4.66 crores. Export of tractors, however, was restricted in view of large unsatisfied demand in the domestic market. Exports on behalf of other manufacturers by the export division were maintained at Rs 1.29 crores. The steel division achieved record business of 582 lakh tonnes, an increase of 90 per cent over the previous year. The instrumentation, electronics and machine-tool divisions (Rs Lakhs) The Week's Companies