International Tractors Limited (ITL), a subsidiary of the Rs 5,000-crore Sonalika Group that has interests in tractors and farm equipment, sports utility vehicles (SUVs) and diesel generator sets, is planning to tap the capital markets through an initial public offering (IPO), according to group chairman L D Mittal.
“We are looking at raising around Rs 800 crore through the IPO in two years from now, the proceeds of which will be utilised to fuel our inorganic growth plans. We are planning some acquisitions, both in the tractors and SUV segments, in Europe. Negotiations are currently on,” he told Business Standard.
ITL, which has been in the tractors market for more than three decades, currently has 35 models in its portfolio with capacities ranging from 20 horse power (HP) to 90 HP. The company has its tractors manufacturing facility in Punjab, which has an installed capacity of 75,000 units a year.
To meet the increasing demand, Mittlal said, the company was planning to scale up the tractors capacity to 100,000 units in the next three to four years with an investment of around Rs 100 crore.
“Sensing demand for high-capacity tractors in the global markets, we are immediately coming out with a 125-HP tractor, a fancy for exports, which will have features including air-conditioning,” he said, adding that the company hoped to beat the US market, which it intended to enter within the next quarter, with the new model in a very short span of time.
Last year, ITL has sold 42,000 tractors in the domestic market and exported over 5,000 units to 70 countries that it has presence in, including the whole of Africa, Australia and Europe. “The US is a big market for us and we expect to sell 7,000-8,000 units a year there,” he said.
Stating that the company was targeting to sell 60,000 tractors in the domestic market this year, Mittal said the tractors subsidiary was expected to contribute Rs 3,500 crore to the group’s turnover this year, while the SUVs division will account for Rs 1,000 crore, primarily on the back of quality and performance.
Monsoons have not become so relevant in the present scenario because tractor no more is an agriculture instrument but a multiple application now, he said, adding that the total tractors market in India was pegged at 600,000 units this year and Sonalika was aiming at garnering a 11-12 per pie of that, as against 9 per cent a year ago.
ICML lines up two new Rhino models
The group’s SUV division, International Cars and Motor Limited (ICML), which had launched its sturdy SUV ‘Rhino’ last year, is now in the process of coming out with new models of the vehicle with new improvements and upgradations, Mittal said.
Since its launch, ICML has so far sold 23,000 units of Rhino. At present, the upgradation and improvements are being done by Pininfarina, an Italian design house that also designs the marque Ferrari cars.
“With focus on tractors, we couldn't concentrate on Rhino properly. Now, we have started making efforts to market this vehicle. We will be rolling out two new models of Rhino within the next six months,” he said.
ICML hopes to sell 50,000 units of Rhino in the next two years. Towards this, the company, which has already infused Rs 200 crore into its Rhino manufacturing plant in Himachal Pradesh, is lining up another Rs 150 crore, Mittal added.