5 pvt equity funds vie for 10% in ITL

Five private equity funds are in race to buy 10 per cent equity in the L D Mittal-controlled International Tractors Ltd (ITL). The deal is set to complete in a month. This will be third and final round of divestment of the promoter's stake in ITL, the makers of Sonalika Tractors, for the financial year.

Earlier in the year, after buying back the 20 per cent stake held by French engineering company Renault for Rs 44 crore Mittal offloaded 20 per cent stake in two tranches of 10 per cent each to Yanmar of Japan and Citigroup for an estimated sum of Rs 320-370 crore.

Sonalika Group chairman Mittal said talks were on with two private equity firms in India and US and also in UK for off-loading another 10 per cent in ITL.

"The two firms in India are the largest private equity firms in the country. After this deal is completed the core promoters will be left with 58 per cent equity in the company," he said.

The fresh infusion of capital raised by sale of stake in the company will be, in part, ploughed back into ITL for expansion of operations. "This financial year production and sale of tractors will be increased to 36,000 units from the 26,000 units sold last year," said Mittal.

Further talks are on with Yanmar group to increase the Japanese firm's outsourcing from ITL. "Exports of both tractors and key components like axle and transmission units is set to increase to Rs 100 crore this year.

The potential and target for the next fiscal is around Rs 300 crore, a third of which will be components," he said. Total exports of ITL last fiscal was Rs 40 crore.

Mittal had earlier said that ITL would also go public in a years time to fund its expansion plans.

Mittal said that the money raised by sale of stake in ITL would also be used for Sonalika Group's new car project International Cars and Motors (ICM) in Himachal Pradesh. Welcome aboard

Contenders for the 10 per cent equity include two private equity firms in India, two in the US and one in the UK

Once the deal is completed, core promoters will be left with 58 per cent in the company

Money raised via the sale is to be used for funding expansion and for the Sonalika group's new cars and motors project