IBEF: October 22, 2019
Punjab-based International Tractors Ltd (ITL), the homegrown tractor manufacturer announced a joint venture (JV) with Shandong Luyu Heavy Industry Company Ltd to enter into the world’s second-largest tractor market.
According to the statement, the JV agreement was signed by Deepak Mittal, managing director, ITL, and Yang Shao Jie, founder and chairman, Shandong Luyu Heavy Industry Company Ltd. in New Delhi on 19 October. The entity will be named as Luyulika (Laizhou) Agri Machinery Company Ltd. The financial advisor to ITL was KPMG.
The venture will invest an amount of US$ 10 million to set up an assembly plant for tractors and engines with a manufacturing capacity of 50,000 units in the first phase and the expansion will be planned in further time.
Shandong Luyu Heavy Industry has presence in small-sized loaders, small and medium-sized excavators and forklifts in China and is worth at around US$ 400 million. The Chinese company also exports products with its existing facility located at Laizhou Shahe Industrial Park in Shandong province.
The Indian tractor maker will expand it business overseas through the JV and also help the company in China to expand its product line up with tractors and tractor engines. The statement also said the JV will assemble engines for wheel loader application for captive consumption of Shandong Luyu Heavy Industry and other wheel loader construction machinery manufacturers in China.
ITL exports tractor engines that can also be deployed for several other similar applications in adjacent sectors including construction equipment.
"Today ITL has presence in more than 120 countries and is a trusted brand among more than one million farmers in both India and overseas. We are taking a leap ahead with the formation of this JV. The engine assembly plant in China is a first by an Indian company," said Deepak Mittal, managing director, ITL.
Jie of Shandong Luyu Heavy Industry Company Ltd said, "We believe that this JV will be able to penetrate with Sonalika range of tractors in China. It shall also help us to offer the globally accepted engine technology of Sonalika to its customers."
In the meantime, the company plans to combine its portfolio of tractors and farm equipment by introducing two new brands - Solis and Yanmar in India. The two brands will sell together with ITL's domestic tractor brand Sonalika, which now is among the top three tractor brands in India.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.