Punjab-based International Tractors Ltd (ITL), makers of Sonalika brand tractors and the flagship company of the Rs 5,000 crore Sonalika Group, is in talks with foreign private equity(PE) investors for diluting 10 per cent stake. The company expects to raise Rs 450-500 crore from equity dilution which would be utilised in funding its acquisition and expansion plans.
At present,Yanmar Group(Japan) holds 12.5 per cent, while JM Financial has 5 per cent stake in ITL. The remaining 82 per cent stake is with promoters. Earlier British company 3i and Citibank had 10 per cent each in the company which was bought back by the promoters.
Speaking to Business Standard, Sonalika Group Chairman, L D Mittal said, “We are in talks with with three or four private equity firms for diluting our 10 per cent stake. Post-dilution, we are hopeful to get Rs 450-500 crore. The proceeds from the equity dilution would help in acquiring a tractor manufacturing plant in Europe and to expand our manufacturing capacity. We are in advanced stage of negotiation and the transaction is expected to be completed in a month’s time.”
Recently, in order to stretch its wings in the South American markets for its Sonalika brand of tractors and farming solutions, the company has tied up with Apache, a leading manufacturer of agricultural equipment in Argentina, to distribute its products under the co-branding of Apache–Solis. According to the protocol signed between the two companies — Apache and Solis (ITL), all units will be assembled in Argentina.
Solis is another brand of the company and it is selling its tractors in the international market with the same brand name. The company plans to tap Argentina, Brazil, Chile, Ecuador, Peru, Surinam, Paraguay and Bolivia. It has also tied up with Brazil’s major tractor and farm equipment manufacturers to sell their products in Brazil.
The company also plans to increase its tractor manufacturing capacity from 60,000 units per annum to 1 lakh units per annum, in order to meet the robust demand in domestic and overseas market. The expansion is likely to be completed in next two years.
ITL is among the top three tractor manufacturers in India. The company also export tractors to various countries, including South Africa, Australia, Zimbabwe, Sri Lanka, Canada, Bangladesh, Algeria, Zambia, Senegal, Ghana.
In order to cater to the African market, the company has set up an assembly plant in Nigeria with collaboration of a leading Nigerian company to expand export base in the African countries and has also launched tractors co-branding with leading Italian companies.
