Sonalika plans China, US foray; looks at acquisition in Europe

Auto maker Sonalika Group today said it is in talks with some firms in China and the US to partner in setting up of manufacturing plants to launch its tractors in these two markets, besides eyeing acquisition in Europe.

The group, which handles farm equipment business through International Tractors Ltd (ITL), has earmarked Rs 200 crore over the next 2-3 years for its overall expansion plans.

"The Chinese market has challenges and opportunities. We have plans to launch products in China and we will tie-up with a local player for that," ITL President (International Business) Rajiv Wahi told reporters here.

He, however, declined to share details saying discussion is going on to finalise the partner.

"After tying up, we will look for setting up a plant in China. The final decision will be taken by early next year," Wahi said, adding that the size of the Chinese market is two lakh units per annum.

He said the company is also looking at setting up an assembly line in the US, where it has already tested the prototypes of the tractors.

"We are discussing with a potential partner... Early next year, the tie-up will be in place," he added.

Wahi also said ITL is exploring possibilities to acquire a facility or a component maker in Europe to set up an assembly line there.

"We are shortlisting firms for acquisitions in Europe to assemble products. Our target is to launch tractors by next year," he said, without sharing the possible deal size.

ITL has two plants in India and operates five units with local partners in South Africa, Argentina and Jordan.

The company today announced its tie-up with Argentinian firm Apache to distribute ITL products, which will be assembled in Latin America. The products will be co-branded.

The Rs 5,000 crore Sonalika Group firm has recently launched two tractors with 75 horsepower and 90 horsepower. It is currently developing tractors in 120 horsepower and 150 horsepower category for overseas markets.

When asked about the investment that the company is planning to make, Wahi said: "The group has earmarked Rs 200 crore for the next 2-3 years for overall expansion."

Besides adding new locations in its international business, ITL is expanding its domestic capacity to 250 units per day from existing 180 units a day by next year.

ITL, which clocked a turnover of Rs 1,500 crore last fiscal, sold about 34,000 units in 2009-10 and is targeting to sell 46,000 units in this financial year.