TAFE acquires Eicher tractor biz for Rs 310 cr

With this acquisition, TAFE, which has a strong presence in the 35 HP and above segments, hopes to augment its domestic market with a combined demand of approximately 50,000 tractors a year.

According to TAFE, the combination with Eicher, which is a strong player with a 55 per cent market share in the below 25 HP segments, would push the combined sales volume to close to 55,000 tractors and the combined market share to 22 per cent of the domestic volumes.

The acquisition would also give TAFE an entry into the lower horsepower category, as well as a presence in states where Eicher has a sizeable share.

The acquisition would give TAFE the opportunity to access air-cooled engines and augment its gear manufacturing capacities. TAFE’s parent company, Simpson & Co Ltd, supplies water-cooled diesel engines above 35 HP for Eicher tractors.

TAFE is likely to end this year with sales of about 35,000 tractors, which will be a 40 per cent growth over last year. The company also has interests in engineering plastics, gears and batteries and has a turnover close to Rs 1,100 crore.

Analysts say the acquisition would give TAFE a market share of about 20-21 per cent. According to the industry data for April-December 2004, TAFE garnered sales of 24,191 units, while Eicher sold 13,670 tractors. Eicher Motors reported a 48 per cent growth in sales of commercial vehicles in the domestic market during the financial year ended March 2005.

Eicher stock rises

: Eicher Motors shares gained 14.3 per cent to Rs 369.30 on the BSE on Wednesday after its board approved the sale of the tractors and engine businesses. The last few months have seen high volatility in the stock on bouts of buying and selling. The stock moved between Rs 273 and Rs 343 since mid-Feb. 2005.