The Hindu Business Line : Intl Tractors to come out with IPO

International Tractors Ltd (ITL), manufacturer of the Sonalika brand of tractors, is planning to come out with an initial public offering in March 2007.

According to Mr L.D. Mittal, Chairman, Sonalika Group, ITL is currently in talks to offload stake to a private equity firm and post the completion of the transaction would commence the necessary formalities for an IPO.

"We are very close to offloading 10 per cent stake in ITL and there are several major private equity firms in the running," Mr Mittal said.

Strategic investments

The Rs 1,000-crore 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. Under the agreement with Yanmar, ITL will manufacture components and 30-40 HP tractors initially for Yanmar and export them to Yanmar's operations in Eastern Europe, the US and Canada, apart from selling them in India. ITL will also make use of Yanmar's global distribution network to sell the Sonalika range of tractors.

To fund expansion

The IPO would help the company to raise funds for a new plant as well as its international operations. ITL had recently evinced interest in purchasing a tractor unit in Eastern Europe.

Further, ITL plans to set up an assembly unit in Africa. This will help boost exports to the region as well as reduce logistical costs. The company plans to ink a marketing tie-up with Tata International for the same and take advantage of the latter's distribution/service network in the region.

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