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Rediff.com  » Business » ITL in talks to divest 10% equity

ITL in talks to divest 10% equity

October 13, 2005 11:15 IST

International Tractors Ltd is in talks with three investors in the US and Europe to divest 10 per cent of its equity. The deal is expected to be finalised in a few weeks.

This comes on the back of the company divesting a 12 per cent stake for an estimated Rs 175-200 crore (Rs 1.75-2 billion) in favour of Japanese tractor company Yanmar last week, and a 10 per cent stake in favour of US-based Citi Group for an undisclosed sum two months ago.

Market sources said the valuation of the deal with Citi was comparable with what Yanmar paid. In that case, Citi would have paid Rs 145-170 crore (Rs 1.45-1.7 billion).

LD Mittal, chairman of ITL's parent group Sonalika, told Business Standard an initial public offering (IPO) was in the pipeline to fund a proposed expansion of ITL's capacity. The IPO is expected to hit the market in a year, although its size has not yet been decided.

Earlier this year, French automobile and engineering major Renault divested its 20 per cent stake in ITL for Rs 44 crore (Rs 440 million), the same price at which it had bought in 2000.

Mittal said the money raised by the sale of equity in the unlisted ITL would be used for the Sonalika group's new car project, International Cars and Motors (ICM), in Himachal Pradesh. Along with the 10 per cent equity in ITL, the Citi Group had also picked up a 20 per cent stake in the car project.

The value of the deal is not known. The initial capacity planned for the car project is about 2,000 vehicles a month at a proposed capital cost of Rs 400 crore (Rs 4 billion). The new venture plans to roll out a 2-litre utility vehicle, Rhino Rover, with a price tag of Rs 600,000.
S Kalyana Ramanathan in New Delhi
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