Renault buys 20 stake in ITL

JULY 19: Renault Agriculture has entered into a three-pronged agreement with International Tractors Ltd ITL for a technical, financial a...

JULY 19: Renault Agriculture has entered into a three-pronged agreement with International Tractors Ltd ITL 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 worldwide, excluding India and surrounding countries.

Marketing 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 Tractors8217; 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, the chairman and managing director, Renault Agriculture, Bruno Morange said here on Wednesday, 8220;we are in the process of finalising the brand name for the tractors. They would either be sold as Renault or Sonalika-Renault. In India, they will continue to be branded Sonalika, while in the foreign markets they would be sold under the Renault brand8221;.

Renault is also planning to source and export components like castings, gear shafts, housings and total transmissions from the country. 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.

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Speaking on the occasion, ITL chairman LD Mittal said the collaboration would help the company quot;to draw on its partner8217;s experience and expertise to upgrade its own range of 30-60hp tractors, thereby providing it a strategic and competitive advantage in the Indian market8221;.

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.