Mohali tractor ancillaries spot opportunity in PTL capex

Despite sluggish agricultural growth, prominent players like Punjab Tractors Ltd (PTL) and International Tractors Ltd (ITL) expect good business this year as they plan a revamp of existing capacities.

Mahindra and Mahindra's ( M&M's) acquisition of 43.5 per cent stake in PTL last year was a windfall for the 100-odd ancillaries supplying to PTL.

Their payment backlog has been released and their rates have also been revised. Senior PTL executives have indicated increased capacity at PTL's Mohali plant. Mahindra tractors may also be manufactured from the Mohali plant. PTL has registered 78 per cent growth in the first two months of 2008-09 compared with the corresponding period of 2007-08.

Another player, ITL (manufacturer of Sonlika Brand Tractors), also recorded 17 per cent growth in sales during April-May 2008 as compared to last year. The company expects 10 per cent growth in overall tractor market this fiscal after witnessing negative 4.7 per cent growth last fiscal.

Some of the financially strong SMEs have decided to increase their production corner a larger pie of the market. One of the vendors said: "We are increasing our production capacity with an investment of Rs 2-3 crore."

M&M has streamlined the items procured from the vendors for the PTL unit. Earlier, it used to procure various types of components from the same vendor, but now it has decided that a particular product would be procured from a specific vendor. As a result, the volume of the vendors has increased significantly.

"The announcement by M &M to manufacture Mahindra tractors and ITL's plans to increase capacity is a blessing. Hence, we plan to expand our operations. Since we do not have the support of the Chandigarh administration and there is hardly any area in Chandigarh to expand, we plan to expand in Mohali, where the PTL facility is situated," said an ancillary unit owner.

"The capacity expansion by the manufacturers is likely to help many ancillaries situated around the tricity of Chandigarh, Panchkula and Mohali," said another vendor.