Tractor and agri machinery maker Sonalika Group is in talks to acquire an Italian tractor manufacturing firm to set up base in the European continent.
L D Mittal, chairman of Sonalika Group, said, “We are aggressively looking at expanding our presence overseas. We have got an approval to sell tractors in the United States and are now negotiating to acquire a tractor maker in Italy to set up a base for the European markets.”
The group, which handles its farm equipment business through International Tractors Ltd (ITL), is currently selling tractors in 68 countries. ITL has four tractor assembly units operational in Cameroon, Egypt and Algeria and Nigeria. The company is looking at commissioning another unit in Africa and a facility in Turkey, Eurasia. All these units would have a combined capacity of 2,000 units per annum on a single shift basis.
Besides Africa, the company is looking at expanding operations in Latin America and China. “We want to double our level of exports from the current 10 per cent of production volumes to 20 per cent. Exports, at present, contribute a fifth of our revenues,” said Mittal. The expansion programmes would be carried out over the next three years. The group expects around Rs 800 crore to filter in from international operations by 2014.
Sonalika is also looking at setting up a new plant in south India. The facility is intended to expand ITL’s share of the southern Indian tractor market in its total sales volumes to 15 per cent from five per cent over the next two years. Currently, over 30 per cent of the company’s tractor sales come from traditional markets of Punjab and Haryana.
The new plant in south India would have an installed capacity of 40,000 units and would help towards doubling ITL’s sales to over 100,000 units over the next two-three years. The company currently has an installed manufacturing capacity of 55,000-60,000 tractors per annum.
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Sonalika recently commissioned a plant, with an installed capacity of 25,000 tractors per annum, in Bihar at an outlay of Rs 50-55 crore. The plant caters to eastern Uttar Pradesh, Bihar, Jharkhand, West Bengal, Orissa and the north-eastern states.
ITL sold 50,000 tractors last financial year. It has set a target to achieve Rs 3,500-crore sales by the end of this financial year, against a turnover of Rs 2,500 crore in 2010-11.