Intl Tractors plans IPO in four months

Riding the IPO boom, International Tractors (ITL), India's fifth-biggest tractor maker, plans to come out with a public issue in the next few months.

ITL, the flagship of the Rs 1,000-crore Sonalika group, is owned 80 per cent by the Mittal family and 20 per cent by Renault Agriculture of France. The company produces 25-60 hp tractors under the Sonalika brand at its plant in Hoshiarpur, Punjab.

"We are in talks with 4-5 investment bankers, including Morgan Stanley, to advise on the IPO which should be out in another 3-4 months," ITL chairman L D Mittal said.

The group is yet to decide the size of the issue. According to Mittal, critical issues like the pricing of the IPO, the stake to be offloaded etc are still being worked out.

The money raised from the IPO will fund ITL's investments in the near future. Mittal said demand from customers and dealers has made the company decide in favour of an IPO.

According to him, ITL should record a 25 per cent growth in tractor sales during this financial year to 20,000 units from 16,000 in 2002-03.

"We have brought down our inventories to almost nil," he said. The higher sales was likely to help ITL achieve a profit of Rs 80 crore during 2003-04. Revenues was expected to surge 25 per cent at Rs 500 crore during the year ended March 31, 2004, Mittal added.

Renault Agriculture had acquired a 20 per cent stake in ITL in 2000. As a part of the tie-up, Renault Agriculture, a wholly-owned subsidiary of French auto major Renault, would soon start sourcing high-powered tractors from ITL for the overseas markets. These tractors would be powered with 70-120 horse power engines and branded as Renault-Ceris products manufactured by ITL.

The Sonalika Group had recently announced a foray into sports-utility-vehicles through technical alliances with UK-based MG Rover and PowerTrain. The vehicle would be produced at a new factory in Himachal Pradesh with an initial investment of Rs 200 crore.

The shares of the country's leading tractor makers like market leader Mahindra and Mahindra, Punjab Tractors, Eicher Tractors and Escorts are already traded in the domestic stock market.

India is the world's largest tractor market followed by USA and China.