New Delhi, July 19: Enault Agriculture has entered into a three-pronged agreement with International Tractors Ltd for a technical, financial and marketing collaboration by acquiring 20 per cent in the domestic company for Rs 44 crore. The collaboration will also usher a new global marketing company, Renault Sonalika International (RSI) with the French company holding an equity stake of 60 per cent. The balance will be held by the Punjab-based ITL. The company will market the products of both the brands world-wide, excluding India and surrounding countries.
Themarketing of both brands in the Indian sub-continent will be undertaken by International Tractors, while the same will be marketed in Europe by Renault Agriculture. Renault Agriculture is a subsidiary of the Rs 1,602 crore Renault group. Renault will transfer the manufacturing licence for its 55 to 80 HP Renault Ceres tractors in the country. The tractors will be manufactured in 2002 at International Tractors' plant at Hoshiarpur. To start with, 3,000 units will be manufactured. A new Rs 80-crore plant with an installed capacity of 40,000 units per annum is being set up. Regarding the brand name, Renault Agriculture chairman and managing director, Bruno Morange said in New Delhi on Wednesday, "We are in the process of finalising the brand name for the tractors. They will either be sold under Renault's brand name or under a new name - Sonalika-Renault. In India, they will continue to be branded Sonalika, while in the foreign markets they would be sold under the Renault brand''.
Renault is also planning to source and export components like castings, gear shafts, housings and total transmissions from India. The first batch of exports is likely to commence in two years.The company expects to control around 20 per cent of the 50,000-unit high-power tractor market within five years. Speaking on the occasion, ITL chairman LD Mittal said that the collaboration would help the company "to draw on its partner's experience and expertise to upgrade its own range of 30-60hp tractors, thereby providing it a strategic and competitive advantage in the Indian market''.
The Rs 182 crore ITL had sold 8,773 tractor units in the 1999-2000 fiscal. The company expects to take this up to 55,000 units in 2004-05 to record a turnover of Rs 1,375 crore. The company is also planning to launch four new models in the 45 HP, 65 HP, 75 HP and 80 HP segments.
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