TIL to sell Caterpillar dealership to Goodearth Minetech for ₹350 cr
Infrastructure equipment maker TIL Ltd on Thursday said it plans to sell its profit-making Caterpillar dealership business — spread over India, Nepal and Singapore — to Goodearth Minetech Private Limited (GPML) of Delhi for a net consideration of ₹350 crore.
Managed through wholly-owned Tractors India Pvt Ltd (TIPL), Tractors Nepal Pvt Ltd (TNPL) and TIL Overseas, the Caterpillar dealership contributed nearly 75 per cent of TIL’s ₹1,496 crore turnover in 2014-15.
According to the stock market declaration, TIPL and TNPL will be sold to GMPL. TIL Overseas will continue to be a part of the TIL group but the assets and liabilities pertaining to the Caterpillar business will be sold to GMPL.
The restructuring will reduce TIL’s employee strength from over 3,000 to about 1,000.
TIL’s share price declined 13 per cent.
According to TIL Chairman and Managing Director Sumit Mazumder, the sale will help revive the loss-making manufacturing business.
The company went on an investment spree by the end of the last decade to boost its own manufacturing business.
Apart from revamping the existing facility at Kamarhati in the suburbs of Kolkata, nearly ₹300 crore was spent in setting up two plants at Kharagpur to manufacture port and yard equipment, among other things, in collaboration with Mitsui of Japan, Hyster and Grove Cranes of the US, and others.
This was done in view of the global shift in customer preference to procuring gears on rental.
A series of scams in coal an iron ore sector, coupled with the slowdown in the economy, hurt the plans. A delay in project completion due to a land tangle added to the troubles.
“Ever since we started production from Kharagpur the economy was heading South, leading to losses, erosion of net-worth and decline in credit ratings,” Mazumder told BusinessLine.
The manufacturing business reported over ₹37 crore in losses for the first nine months of 2015-16. Mazumder expects the financials to improve dramatically. “Post-restructuring our balance-sheet size will reduce substantially. But we are confident to increase business volumes in next three to four years,” he said.
“Our strength is in manufacturing and designing. We would like to focus on that in the years to come. Over the last one and a half years we have started exporting in a small way. There are plans to add new product lines.”