Calcutta, April 22: Calcutta-based Tractors India Ltd (TIL) has decided to hive off the Caterpillar dealership business, accounting for nearly two-thirds of its revenue, to Delhi-based Goodearth Minetech Pvt Ltd (GMPL) for Rs 350 crore.
Sumit Mazumder, chairman and managing director of TIL, said the decision was taken keeping in mind the long-term business objective even as it would impact the immediate business of the company.
"We want to focus on our strength in the manufacturing side and we believe there is a future growth prospect in this part of the business. So, the board has taken a decision on April 21 to transfer the Caterpillar dealership business. This will impact our business. The balance sheet will become smaller and the number of employees can also come down. But it will unlock funds, which will then be utilised to focus on other business areas," Mazumder said.
Stock market-listed TIL had transferred the Caterpillar business five years ago to Tractors India Pvt Ltd (TIPL). The transaction will now involve the sale of TIPL along with two overseas ventures involving Caterpillar.
TIL has appointed KPMG and Grant Thornton to determine the fair value of the business, which came at Rs 350 crore for TIPL. The company expects to earn additionally from the sale of the Nepal and Singapore businesses.
Little is known about Goodearth Minetech Pvt Ltd apart from the fact that its director Sunil Chaturvedi is the managing director and CEO of TIPL.
According to a notice to the BSE, Chaturvedi has been accordingly listed as "interested" in the proposed transaction.
Mazumder, who has just stepped down as the national president of trade body CII, clarified that more parties might show interest after shareholders' approval was received. However, GMPL has already received the crucial approval from Caterpillar to take over the business from TIL.
Tractors India was engaged as the dealer of American company Caterpillar for over six decades for their earthmoving, construction, mining equipment in the east and north India, Bhutan and Nepal, additionally providing spares and related services in these markets. TIL is also engaged in material handling equipment such as mobile cranes, port equipment and road construction equipment.
