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Phalguna Jandhyala

New Delhi, Sept.10 International Tractors Ltd (ITL), manufacturer of the Sonalika brand of tractors, is looking at bidding for two European tractor companies. The bids for the two companies are likely to be finalised in the next couple of months.

According to Mr L.D. Mittal, Chairman, Sonalika Group, “We are looking at picking up a major stake, around 51 per cent, in a tractor company which is based in Eastern Europe for around Rs 200 crore.”

He, however, did not want to disclose the name of the company as ITL is the only Indian company that is in the race to pick up the stake. ITL is also looking at making a bid for Romania-based tractor company Tractorul.

Tractorul had been put on the block by the Romanian Government and Mahindra was among the front-runners. But an unresolved debt liability of €180 million led to the collapse of the deal and the company was auctioned off and bought by a local company Flavius Invest. The new owner, however, is now selling the assets, comprising the tractor-manufacturing factory, casting and forging module and other independent assets.

Mr Mittal said that ITL was working on the bids simultaneously and they could finalise it by end of October.

“The acquisitions would give us an advantage from the export point of view as we would be closer to the European markets as well as have an advantage to cater to the needs of the North American market. Also, it gives us an advantage in terms of technology,” Mr Mittal said.

ITL plans to use both the plants as assembly units and the parts would be exported from its Hoshiarpur plant. ITL currently exports its tractors to France, South Africa, Australia, Zimbabwe, Sri Lanka, Canada, Nepal and Bangladesh.

It is also in the advanced stage of finalising the private equity firm which would be picking up a five per cent stake in ITL.

ITL already has strategic investments by four firms, which collectively hold 37 per cent. This includes a 10-per cent stake each by Citigroup and 3i, Japanese tractor maker Yanmar has about 12 per cent stake, while Morgan Stanley has a five per cent stake.

“The talks with the interested firms are in the final stages and we expect to close the Rs 175-crore deal in a month’s time,” Mr Mittal said.

The company has also postponed its plans of tapping the capital market to the beginning of the next fiscal. “We had earlier planned to go for an initial public offer (IPO) by the end of the current fiscal. But now we will look at the results this year first and then go for the IPO,” Mr Mittal said.

As per the new plans, ITL proposes to go public during the first quarter of the next fiscal. It plans to raise around Rs 800 crore to fund its expansion plans.

More Stories on : Mergers & Acquisitions | HCV/LCV/Tractors | Overseas Investments

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