International Tractors mulls assembly unit in US

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Neha Kaushik

New Delhi, Nov. 5

CLOSE on the heels of the Japanese tractor major Yanmar purchasing equity in International Tractors Ltd (ITL), the company is now all set to leverage the tie-up to boost its overseas presence.

ITL is looking to set up an assembly unit in the US in 2006. "We will be assembling hobby or compact tractors for the US market. Following our tie-up with Yanmar, we have access to a complete range of models," Mr L. D. Mittal, Chairman of ITL, said.

Yanmar had picked up a 12 per cent stake in ITL last month for about Rs 200 crore. International Tractors, which sells tractors under the Sonalika brand, also plans to set up an assembly unit in Africa to help boost exports to the region and 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.

"Our exports should go up eight to ten times next year to over 10,000 units a year. Yanmar plans to source a substantial number of components and tractors from our facility for its global operations," Mr Mittal said. To meet the anticipated rise in sales, ITL is conducting a feasibility study to set up another facility, which is most likely to come up in the south of the country. "We do not have a presence in the southern States. We are studying several States, including Tamil Nadu, Andhra Pradesh, Karnataka and Maharashtra, which would enable us to sell our products in the southern market," Mr Mittal said. The new plant will require an investment of about Rs 150 crore. ITL's current unit is located in Punjab. The company had recently also offloaded a 10 per cent stake to Citigroup and is in talks with a private equity player to offload another 10 per cent stake.

(This article was published in the Business Line print edition dated November 6, 2005)
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