Renault buys foothold in India
By N. Mohan | 05 May 1999
Renault of France will soon launch its 55 to 85 horsepower tractors in India. Renault Agriculture, a wholly-owned tractor subsidiary of the $41 billion French auto major, has concluded an agreement with the Hoshiarpur, Punjab, based International Tractors Ltd for manufacturing these tractors in India. The agreement is seen as a precursor to a full-fledged Renault assault on the Indian market. It is believed that the company will launch its range of cars and multi-utility vehicles in India in the near future.
Renault Agriculture's officers in India have confirmed that the group will set up a joint venture in India for producing truck engines. Though partners for this venture have not been identified, Renault will, in all probability, join hands with International Tractors.
International Tractors chairman and managing director L.D. Mittal says his company is planning to make cars and MUVs. He says the collaboration with Renault will not be limited to tractors. He says any tie-up with Renault will be for its small car range.
Among the cars likely to be considered is Twingo, a direct competitor for Maruti Udyog's Zen (which Suzuki sells as the Alto in overseas markets). The company is also considering MUVs from the Nissan range.
Mr Mittal wants vehicles that can be targeted at rural markets.
Besides its Sonalika brand of tractors, International Tractors' product range includes multi-crop threshers, reapers, potato planters, seed-cum-fertiliser drills and submersible pumps. The company sold 6,211 tractors in 1998-99 and its sales rose to 123.47 crore from Rs 53.67 crore in 1997-98.
Renault has recently acquired a majority stake in Japan's troubled Nissan Motor Company. Renault Agriculture's may well see International Tractors, in which it has picked up a 20 per cent stake, as a base from which to launch Nissan products in India. Renault's agreement with International Tractors provides for the French company increasing its stake to 27 per cent.
The French company will provide International Tractors with the technology and designs for the manufacture of higher power tractors. These tractors will be sold in India and neighbouring countries. Two new marketing companies, with Renault Agriculture holding 60 per cent and International Tractors 40 per cent, will be built to sell the tractors in European and other countries. The Hoshiarpur factory has a capacity to make 18,000 tractors a year.
