Sonalika is setting up a second facility to make 50,000 tractors in the southern part of India, and will invest between Rs 100 crore and 150 crore for the purpose.

The new facility is likely to come up in Karnataka within a year, Group Chairman L.D. Mittal said.

This comes on the heels of an expansion at International Tractors’ existing facility at Haryana to scale up the capacity from 80,000 units to 1,20,000 by investing around Rs 150 crore.

During this fiscal, the company’s tractor sales will see 20 per cent growth to touch 62,000 units, Mittal said.

The Group’s exports to nearly 70 countries currently account for around 10 per cent of its total sales.

Sonalika is increasing its focus on overseas sales, and will start exporting to 30 more countries in the next three months. Next year, Mittal expects Sonalika’s exports to double and touch 50 per cent of the total sales in three years.

The company is also preparing to set up its unit in the US, and plans to deploy the market reach of Japanese company Yenmar, with whom it has a partnership. Five years ago, Yenmar had invested Rs 250 crore for a 14 per cent stake in Sonalika.

This will help Sonalika, which will launch a 120 HP tractor in the next six months, make a more aggressive foray into bigger tractors and go into the US market with co-branded products.

More recently, private equity firm Blackstone has bought 12.5 per cent stake in International Tractors, then valued at Rs 4,200 crore, and as part of the terms committed upon, Sonalika will go for its Initial Public Offering within the next three years.

The company had proposed an IPO in 2008, but deferred it because of adverse market conditions.

On the SUV front, the Extreme, Sonalika’s recently launched vehicle, is selling around 500 units per month.

The company proposes to expand into the four-wheeler space with a range of CVs, and is currently working on rolling out a 1.5 tonne pick-up codenamed Windy in the next fiscal.

(This article was published on February 23, 2013)
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