International Tractors Establishes Joint Venture to Open Plant in China
PUNJAB, India—International Tractors Ltd. (ITL) anounced Monday that it has entered into a joint venture with Shandong Luyu Heavy Industry Co. Ltd. that will invest $10 million to set up an assembly plant in China for tractors and engines. The plant has a manufacturing capacity of 50,000 units.
In a prepared statement, the Indian company said the agreement was signed by Deepak Mittal, managing director at ITL, and Yang Shao Jie, founder and chairman of Shandong Luyu, in New Delhi on October 19. The joint entity will be named Luyulika (Laizhou) Agri Machinery Co. Ltd. KPMG was the financial advisor to ITL in the transaction.
According to the statement, the $10 million investment is simply phase 1. Further investments will be planned per future expansion.
Shandong Luyu is a $400 million company with a presence in the small-loader market, as well as the small and medium-sized excavator and forklift markets in China. The company has an existing facility located at Laizhou Shahe Industrial Park in the Shandong province, and it exports many products.
Under the joint venture, ITL will add tractors and tractor engines to the Shandong Luyu product lineup. The venture also calls for ITL to assemble engines for Shandong Luyu wheel loaders and those of other construction machinery manufacturers in China.