Sonalika Group’s flagship company International Tractors Ltd (ITL) on Monday announced its entry in the world’s largest auto market China through a joint venture with over USD 400 million Shandong Luyu Heavy Industry Co. As part of the JV agreement, signed between the two partners on Saturday, Sonalika will also set up an assembly plant for engines in China, a release said. Sonalika which is already amongst the largest exporter of tractors from India would add China to its overseas presence with this JV, Luyulika (Laizhou) Agri Machinery Company Ltd, Sonalika said in the release.

“China market has enormous potential for our range of tractors and with our association with Shandong Luyu Heavy Industry Co. Ltd, we are confident of providing farmers in China with best in class technology at competitive price point,” said Deepak Mittal, managing director, Sonalika ITL. ITL at present has a presence in more than 120 countries. Based in the Laizhou Shahe Industrial Park of the Shandong province, Shandong Luyu is an established player in small size loader, small-medium-sized excavator and forklift in China and also exports the products to many countries across geographies, the release said.

China is the second largest tractor market of the world, and is slowly gaining relevance for global tractor manufacturers due to changing market and emission norms which offers an opportunity for Sonalika to expand its global footprint into China, the company said. Besides, the JV will also enable the Chinese partner to expand its product line up and offer ITLs range of tractors in the Chinese market, it added. “We believe this JV will be able to penetrate deep range of Sonalika tractors in China and also help Shandong Luyu to offer engine technology of Sonalika to its customers,” said Yang Shao Jie, founder and chairman, Shandong Luyu Heavy Industry Company.

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The JV will also assemble the engines for the wheel loader application for captive consumption of Shandong Luyu and other wheel loader construction machinery manufacturers in China, it said.

It will invest USD 10 million to create a capacity of 50,000 engine and tractor assembly facility in phase-1 and later on, further investments will be planned as per the future expansion, the release stated. “Today we are taking a leap ahead with the formation of this JV and I am proud to say that Sonalika will be setting up an assembling plant in China, a first by an Indian company for engines,” Jie added.

“China market has enormous potential for our range of tractors and with our association with Shandong Luyu, we are confident of providing farmers in China with best in class technology at a competitive price point,” Mittal added. KPMG India was the exclusive financial advisors for Sonalika for this transaction, the release said.





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