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Thursday, November 30, 2006

International Tractors plans IPO

International Tractors, ITL, a manufacturer of the Sonalika brand of tractors, is mulling an initial public offering, IPO issue in March 2007, reports The Hindu Business Line.

ITL is currently in talks to offload 10% stake to a private equity firm. Post the completion of the transaction it would commence the necessary formalities for an IPO, according to L D Mittal, chairman, Sonalika Group.

The Rs 10 billion tractor firm already has strategic investments by three firms, including two private equity firms, which collectively hold 32% in ITL. This includes a 10% stake each by Citigroup and 3i, while Japanese tractor maker Yanmar has about 12% 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, US and Canada, apart from selling them in India. The company will also make use of Yanmar`s global distribution network to sell the Sonalika range of tractors.

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

It also plans to set up an assembly unit in Africa. This will help boost exports to the region as well as reduce the logistical costs.

ITL plans to ink a marketing tie-up with Tata International for the same and will take advantage of the latter`s distribution/service network in the region.

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