Punjab Tractors, fresh from a recent uptrend, is gaining strength as many bidders are believed to have queued up for the PSIDC stake in the company.
The scrip of the Punjab state-run trator major inched up 0.89% to Rs 152.20 on BSE in afternoon trades on Friday. From a low of Rs 145.35 on 18 December 2002, the scrip has gained 4.7% to the current Rs 152.20.
Earlier, the scrip had surged sharply from a multi-year low. From Rs 112.75 on 28 October 2002, the scrip rallied 36.4% to a recent high of Rs 153.90 on 10 December 2002. Thereafter, the stock has moved in a band of Rs 145-155 in the last one month.
As per reports, a number of bidders have submitted initial bids for acquiring the Punjab State government's 23.5% stake in the north based tractor major. Among the bidders who have put in expressions of interest are Mahindra & Mahidra, Eicher group, Kirloskar Oil Engines, TAFE, Escorts, New Holland, SAME, International Tractors and private equity investor Warburg Pincus besides agri-MNC AGCO. 15 January 2003, was the last day for the bidders to submit EoIs. The EoIs will be followed by price bids . The Punjab government had set a net worth criteria of Rs 200 crore for the bidders.
The state government's decision to sell its stake in PTL comes at a time when the tractor industry is going through difficult times as a result of the drought this year. The fortunes of the tractor industry are directly linked to the monsoon as good rain promises a good harvest, and a good harvest results in increased agricultural income.
PTL has been dogged by heavy inventories. In Q2 ended 30 September 2002, PTL reported a sharp 65% fall in net profit to Rs 10.8 crore on a 44% drop in top line to Rs 132.90 crore. The operating profit margin contracted significantly to 15.3% from 19.8% in the same quarter last year, on account of rising per unit overheads and employee cost. The company's working capital has also worsened in the past one year, and receivables have climbed up to four months of sales. This has led to interest cost rising sharply, thereby, further putting pressure on the bottom line.
PTL has a capacity of 60,000 tractors. Besides tractors, PTL's product line also includes combine harvestors and forklifts.
PTL has, over the years, promoted two companies Swaraj Mazda and Swaraj Engines. PTL has a 33% stake in SML, a light commercial vehicles maker with technology from Mazda . PTL owns 29% stake in SEL which makes diesel engines in collaboration with Kirloskar Oil Engines. PTL also holds 24.1% stake in Swaraj Automotives.
BSE Code: 500344
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