The Hindu Business Line : Sonalika in talks for car tie-up

The Sonalika Group is learnt to have initiated discussions with Malaysian automotive firm Proton along with other overseas automobile majors to rope in a strategic partner for its proposed entry into the passenger car market.

According to sources, apart from Proton, the Sonalika Group is currently in talks with two European companies and a Chinese firm. When contacted, Mr L.D. Mittal, Chairman, Sonalika Group, while declining to confirm the names of the companies it was talking to, said that Sonalika was keen to enter the passenger car market in tie-up with an overseas automotive major. "The negotiations are likely to be finalised in the next couple of months", he added.

Sources said that Sonalika would offload upwards of 10 per cent stake in International Cars and Motors Ltd (ICML) to the strategic investor. Currently, private equity firms hold about 30 per cent stake in ICML.

ICML earlier had a technical tie-up with Rover UK and introduced its first vehicle, the MUV Rhino, utilising Rover technology. According to Mr Mittal, Rhino has met with success in the two markets where it was launched, Punjab and Haryana, and will be rolled out in all the other northern States this quarter.

Proton has been eyeing an entry into the Indian market and was earlier said to be in talks with Hindustan Motors.

Tractors Division

Sonalika is also in discussion to offload 10 per cent in International Tractors Ltd (ITL), manufacturer of the Sonalika brand of tractors, to a private equity firm. The tractor firm already has strategic investments by three firms, including two private equity firms, which collectively hold 32 per cent in ITL. This includes a 10 per cent stake each by Citigroup and 3i, while Japanese tractor maker Yanmar has about 12 per cent stake in the company. ITL, which had revenues of Rs 1,000 crore previous year, is planning to go in for an IPO next year.

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