Naik: Focused

Mumbai, July 29: Larsen & Toubro (L&T) will sell its stake in L&T-John Deere Private Limited ? a joint venture manufacturing agricultural tractors ? to sharpen its focus in its core business.

The engineering, technology and construction company is exiting the tractor business in favour of its joint venture partner Deere and Company, a global player in tractors, L&T chairman A.M. Naik said.

Experts say this move is part of L&T's plan to exit from non-core businesses. A couple of years ago the company exited from its cement business as well.

L&T officials said the company has exited the joint venture with Deere and Company for a “fair consideration”.

The joint venture was formed with Deere to manufacture agricultural tractors in 1997.

Commercial operations started in 2000 at a manufacturing facility near Pune. The tractors are made at three inter-linked factories: transmission, engine and vehicle assembly units.

Initially, in line with the technological expertise of its American partner, the local JV decided to venture into the higher horse-power range of 50 hp to 70 hp. It quickly achieved a key position in the premium segment of the tractor market.

However, after experiencing the country’s agricultural needs, the JV started manufacturing lower horse-power tractors in the range of 47 hp-37 hp.

The divestment by L&T comes at a time when the tractor industry is perking up and companies are slowly but surely making a turnaround.

There is a consolidation in the industry with Tafe acquiring Eicher Tractors.

M&M is battling John Deere in the US and it is expected that the American company will pose a stiff competition to M&M at home.