The Hindu Business Line : TAFE to acquire Eicher's tractor business for Rs 310 cr

Ms Mallika Srinivasan, Director, TAFE, with Mr S. Sandilya (centre), Chairman, Eicher, and Mr Siddhartha Lal, Group Chief Operating Officer, Eicher, at a press conference in the Capital on Wednesday. - Kamal Narang

New Delhi , May 25

EICHER Motors Ltd today announced that it would be selling its tractor, engine and gears division to Tractors and Farm Equipment Ltd (TAFE) for a consideration of Rs 310 crore.

The transaction would raise TAFE's marketshare to 22 per cent in the Indian tractor market taking it to the No 2position. TAFE will be purchasing Eicher's tractor unit in Bhopal, the engine unit at Alwar and gears units in Parwanoo.

Ms Mallika Srinivasan, Director, TAFE, said the purchase would give the company a combined annual sales volume of 53,000 tractors. "The Eicher brand would add in excess of Rs 500 crore to revenues apart from providing TAFE manufacturing units in the heart of the tractor market.

"It should help us achieve revenues of about Rs 2,000 crore and sales of 60,000 units in the current fiscal. Further, we will have the No 1 position in Uttar Pradesh, Punjab and Haryana, which account for about 33 per cent of tractor sales," she said.

Apart from giving TAFE greater access to the northern markets, the acquisition would enable TAFE have a greater presence in the lower horse-power tractor segment, in which Eicher has a significant market share. It would also have a wider product portfolio spanning from 25 HP to 75 HP tractors.

TAFE is making the purchase through a 100 per cent-owned special purpose vehicle and said that purchase amount would be met through a combination of internal accruals and debt. The company would not be amalgamating the newly acquired businesses with itself but would keep it as a separate legal entity, with an independent sales team for the Eicher brand.

For Eicher Motors the sell-off provides financial strength to invest in its core businesses of commercial vehicles and motorcycles.

Mr S. Sandilya, Group Chairman and Chief Executive, Eicher Group, said: "We have decided to focus on the commercial vehicles business as a major growth driver instead of being a mid-sized player in three or four segments. This focus will help us propel ourselves on to the next trajectory of growth and make us a strong player in the commercial vehicle market with a full range of vehicles.

"The Board approval of the sale of the tractors, engines and gears divisions of EML is a step in the direction of focusing on select businesses in which we can attain strong market positions; in particular, on the commercial vehicles business."

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