Sonalika International Tractors Ltd (ITL) plans to enter the Chinese market in 2018 as it looks to expand market to double overall sales to 2 lakh units annually in the next five years, a top company official said.
The company, which crossed one lakh units sales milestone in 2017-18, is looking at assembling its tractors in China with localisation of certain contents through a local partner.
"We are in the phase of fixing our localisation plant, and fixing how the business will work...Towards the end of this year we should see a physical start in China," Sonalika ITL Executive Director Raman Mittal told PTI.
When asked about the local partner, he declined to comment and said it would be announced at an appropriate time when the company is fully ready with its plans for the Chinese market.
"Finding the right partner was easy and most of the things are done," Mittal said adding the current focus of the company was to get its product right for the new market which it is trying to enter.
"We are in an exploration phase (for product) right now...Since it is our first entry in China it has to be right," he said adding if the product was right, the market held big potential for the company.
China, like India, has huge domestic need and considering the population, demand wouldn't cease in times to come, he said.
"China could become as big as India for us and if that comes true it could mean a new plant in China," Mittal added.
Last fiscal, the company sold a total of 1,00,001 units of tractors out of which around 86,000 were in India and the rest were exported.
When asked about the company's overall plans going forward, Mittal said:"In 2017-18, we had achieved total sales of one lakh units, achieving our target of doubling overall sales from 50,000 units in five years."
Now going forward, he said,"we are again targeting to double the total sales to 2 lakh units annually in another five years."
Bullish about achieving the target, he said Sonalika ITL will continue to develop and introduce new products like the Sikander range of tractors which has received a robust response accounting about 90 per cent of total production at present in less than a year.
When asked about investments, Mittal said the company has earmarked Rs 250 crore for 2018-19 to meet requirements in India.
"This year we are expanding for a new CRDi (common rail direct injection)engine platform...We are also going to launch new transmission for which we are investing on machining, gear shops and allied areas," Mittal added.
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