Engineering and construction major Larsen & Toubro has decided to exit the tractor business by divesting its 50 per cent stake in joint venture, L&T-John Deere.
The divestment is in line with steps taken by the company to exit from non-core areas and focus on its core businesses, chairman and managing director A M Naik said. The core business includes engineering and construction, electrical and electronics, information technology and engineering services.
Naik did not reveal the price realisation for the divestment. He, however, said L&T had invested over Rs 87.5 crore (Rs 875 million) in the venture.
Under the proposed divestment, the venture would become a wholly-owned subsidiary of Deere & Company, he said.
The joint venture for manufacturing agricultural tractors was set up in 1997. Deere, with a turnover of over $20 billion, is a leader in agricultural equipment market. The biggest player in this segment is Mahindra & Mahindra.
Commercial operations started in 2000 from L&T's manufacturing facility near Pune, Maharashtra.
The venture initially introduced tractors in the higher-horse power range and quickly achieved a key position in the premium segment of the market. The venture also exports tractors to the US, Europe and several East Asian countries through the distribution channels of Deere.