International Tractors Set Up a New Plant In Cameroon

Yaounde, Cameroon Africa. (Cameroon News) – In an effort directed towards stepping up exports, International tractors have opened a plant in Cameroon and have also announced the intention to open up three more plants in other parts of Africa.

International Tractors Ltd, the manufacturer of Sonalika tractors, has proposed a strategy to enhance exports since the competition is increasing heavily in the domestic markets. As a part of this the company proposes to devise plans that would work towards doubling the contribution of exports to its total sales.

On Thursday, the company announced that it has newly inaugurated an assembly plant in Cameroon and plans to put in place three more similar facilities in other parts of Africa.

“Our exports have grown quite significantly over the past two years…120% in 2009-10 and 60% so far this fiscal (year),” said Rajiv Wahi, president (international business), International Tractors. “Going ahead, we would like to be the largest exporter of farm equipment from India.”

In 2009-10, the company exports amounted to close to 6,000 tractors, getting them around Rs.400 crore in overseas revenue. In the domestic market which is still very much its cup of tea, it sold 50,000 tractors. The company’s total turnover in 2009-10 was Rs.2000 crore.

“We want to increase our level of exports from the current 10% to 20%,” said Wahi. “Besides Africa, we are looking at expanding operations in Europe, Latin America and China.” The expansion plans of the company would be spread across a time frame of over three years, he said.

Mahindra and Mahindra Ltd export the maximum number of tractors from India. It exported 9,239 tractors during April-February, which is a sharp increase from 6,581 units that it had recorded a year earlier.

International Tractors, that operates out of the capital of India , New Delhi has shelled out Rs.190 crore to set up its assembly plant in Cameroon. It will also put forth a further funding of Rs.100 crore as a part of its share in putting in place assembly lines in Algeria and one each in the eastern and southern regions of Africa in synergy with local partners.

The reason for looking at local tie ups was so that they get to understand the African market which comprises of 40 large countries and is mostly unexploited and hence shows a lot of promise.
“The idea is to have five regional centres in Africa, which would cater to the demands from 40 countries in Africa. All facilities would have an installed capacity to roll out 2,000 tractors per annum on a single-shift basis,” Wahi said.

The company has also keyed in on Tanzania and Kenya in the eastern region of the continent, and Mozambique, South Africa, Zimbabwe and Namibia in the south as sites for setting up facilities in future as part of their expansion plans in the continent, he added.

The company has already made a foray into Egypt after setting up joint ventures with a local partner.

Indian tractor manufacturers “are facing a lot more competition at home today. So, they have to globalize if they have to keep growing,” said Rakesh Batra, national leader (automotive sector), Ernst and Young.

He added that while it is no easy task for the companies to foray into and struggle to make mark in developed markets in the West, Africa provided a lot of scope owing both to its vast size as well as because the market is still to be exploited. “…Your existing technology or some of your older technology can actually be sent in to Africa as the country is still evolving in terms of safety and emissions and technology.”

International Tractors is also on the lookout for an acquisition or a partner to make a foray with a solid base in Europe. A decision regarding this move as well as detailed plans would be taken in the coming two months, Wahi said.

The company is also planning to move into Argentina where the operations for Latin America will be based out of converting it into a regional hub and is also in the process of undertaking a feasibility study on the Chinese and the US markets, he added.