Our Bureau

New Delhi/Chennai, Feb. 25

EICHER Motors Ltd (EML) is exploring a proposal to sell its tractor and engine businesses to Tractors and Farm Equipment (TAFE). The proposal, if it goes through, would create the second largest tractor manufacturer in the country after Mahindra & Mahindra.

EML had gross sales of Rs 1,565 crore last year, and its tractor and engine sales are estimated at about Rs 500 crore.

EML on Friday announced that based on a review of its business portfolio, it has decided to focus on its commercial vehicles business as a major growth driver. The company said that its Board of Directors have granted in-principle approval for exploring opportunities for sale of its tractor division at Mandideep (in Madhya Pradesh), gears division at Parwanoo and engine division at Alwar on a "slump sale" to TAFE, who has sent a proposal in this regard.

``In order to propel ourselves on to the next trajectory of growth, we have reviewed our portfolio with the objective of focusing on select businesses in which we can attain strong market positions. In particular, we believe we have the potential to grow aggressively and reach a leadership position in commercial vehicles. Against this background, we have entered into discussions with TAFE for divestment of our tractors and engines businesses as going concerns,'' Mr S. Sandilya, Chairman and Group Chief Executive, Eicher Group, said.

Meanwhile, according to a TAFE statement, the company with this proposed acquisition hopes to augment its domestic market with a demand of approximately 50,000 tractors a year. `This will give us a strong number two position in the industry,'' said Ms Mallika Srinivasan, Director, TAFE.

(This article was published in the Business Line print edition dated February 26, 2005)
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