Sonalika, the Rs 5000 crore Group, having units at Hoshiarpur in Punjab and at Fatuah in Bihar and touted as among the top three tractor manufacturers in the country is tapping newer overseas markets like European Union, Far East and improving footprint in domestic markets like Maharashtra, Madhya Pradesh and Gujarat to achieve its aim of increasing tractor sales to 1,00,000 units a year in next couple of years.
“Good monsoon augurs well for tractor industry in general and Sonalika in particular. Sonalika’s Solis Tractor that was showcased at an Agri show in Germany and inroads into European Union Countries, CIS and Far East markets would boost sales” opined L.D. Mittal, Chairman, Sonalika Group and former Chairman of Tractor Manufacturer’s Association.
Mittal said that the International Tractors Limited (ITL), a flagship company of Sonalika Group is a zero-debt company which is now looking at a much higher share of exports to grow. The ITL already exports to about 70 countries and has set up assembly lines in Nigeria, Cameroon, Algeria, Brazil, Germany and Argentina, co-owned with local distributors. He said that Sonalika tractors are a perfect fit in these markets: "Farmers there want simple and robust machines that they can repair themselves. Our machines meet those criteria," he says. Now, the idea is to focus on higher HP tractors and reach out to developed markets in Europe and the United States.
There's a good reason for looking outside India — a tractor sold overseas fetches 30% higher margin than a unit sold locally. Currently, ITL has international sales of about 10,000 tractors a year, which accounts for 17% of its revenues. Going forward, Sonalika wants 30% of the increased sales of 100,000 tractors to come from exports. "We are at just 10% in India [market share]. By expanding reach and network, it shouldn't be difficult to get to 15-16%," in near future.
He said that in 2010, a Greenfield manufacturing facility was commissioned at Fatuah, Bihar, with a capacity of 20,000 units a year, while last year the Hoshiarpur factory was expanded by 20,000. "By December, we will double capacity at Hoshiarpur, from 75,000 to 150,000 . The Bihar plant was a first step outside Punjab, a two-pronged strategy to augment capacity as well as reach. "We want to extend our green revolution from the north-west to eastern Uttar Pradesh, Bihar, Jharkhand, West Bengal, Odisha and the north-east."