The Hindu : Business : Eicher sells tractor business to TAFE

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Thursday, May 26, 2005

Business

Business

Eicher sells tractor business to TAFE

Special Correspondent

Deal valued at Rs. 310 cr.; brand to be retained initially

NEW DELHI: Eicher Motors Ltd. (EML) on Wednesday announced the decision to sell its tractors, engines and gears divisions for Rs. 310 crore to TAFE Motors and Tractors Ltd., a wholly-owned subsidiary of Tractors and Farm Equipment Ltd.

"In fact, the board of directors of EML granted approval for the sale on a going concern basis of the tractors, engines and gears divisions of the company at Manideep, Alwar and Parwanoo to TAFE Motors and Tractors for a total consideration of Rs. 310 crore," Eicher group Chairman and Chief Executive, S. Sandilya, said at a press conference addressed jointly with the Director of TAFE, Mallika Srinivasan.

Eicher has informed the Bombay Stock Exchange that the board of directors of EML has approved the agreed draft of the agreement for the transaction and the two parties will sign the definitive agreement shortly.

Ms. Mallika Srinivasan said it was an all-cash deal to be funded through internal resources and debt, and the deal would be a win-win situation for both sides. While Mr. Sandaliya said parting with the tractor division would enable them to be more focussed on commercial vehicle business where there was lot of scope for consolidation, Ms. Srinivasan said, "This acquisition will provide strong synergies of growth in the future to help achieve market dominance."

"It will give us an additional revenue of Rs. 500 crore and we are targeting at Rs. 2,000 crore revenue in 2005-06," she said.

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