International Tractors Limited, a subsidiary of the Sonalika Group that deals in tractors and farm equipment, SUVs and diesel generator sets, plans to tap the capital markets via an initial public offering (IPO). “We are looking to raise Rs 800 crore via the IPO in two years; the proceeds will fuel inorganic growth plans,” Sonalika Group Chairman L D Mittal told Business Standard.
ITL, which has been in the tractors market for more than three decades, currently has 35 models in its portfolio with capacities ranging from 20 horse power (Hp) to 90 Hp. The company has its manufacturing facility in Punjab with an installed capacity of 75,000 units a year.
To meet the increasing demand, Sonalika will scale up the tractors capacity to 100,000 units over the next three to four years with an investment of around Rs 100 crore, said Mittal.
Sensing demand for high-capacity tractors in the global markets, the company will soon come out with a 125-HP tractor, a fancy for exports, which will have features including air-conditioning. Mittal added that the company will enter the US market within the next quarter and be in a leading position with its new product. “The US is a big market for us and we expect to sell 7,000-8,000 units a year there,” Mittal said.
Last year, ITL sold 42,000 tractors in the domestic market and exported more than 5,000 units to 70 countries including the whole of Africa, Australia and Europe.
According to Mittal, the company will sell about 60,000 tractors in the domestic market, which is pegged at 600,000 units, this year. Sonalika is aiming for 10-12 per pie of the market, as against nine per cent a year ago.
He said that the tractors subsidiary will contribute Rs 3,500 crore to the group’s turnover this year, while the SUVs division will account for Rs 1,000 crore, primarily on the back of quality and performance.
ICML to launch two new Rhino models
Mittal said that the group’s SUV division, International Cars and Motor Limited (ICML) will soon introduce two new models of its sturdy SUV Rhino.
Since its launch last year, ICML has sold 23,000 units of Rhino. Italian design house Pininfarina, which designs the marquee Ferrari cars, is doing the upgradation and improvements for the SUV.
“With focus on tractors, we couldn’t concentrate on Rhino properly. Now that we have started making efforts to market this vehicle, we will be rolling out two new models of Rhino within the next six months,” Mittal said.
ICML hopes to sell 50,000 units of Rhino in the next two years. Towards this, the company, which has already infused Rs 200 crore into its Rhino manufacturing plant in Himachal Pradesh, is lining up another Rs 150 crore, Mittal added.