K K Birla group plans foray into the tractor business through group firm Texmaco Ltd. The engineering outfit is planning to set up a tractor manufacturing facility at one of its existing factories in West Bengal.
The company has plants in Belgharia, Agarpara, Sodepur and Panihati, all in north 24-Parganas district in West Bengal. It manufacturers power tillers under 'Texmaco Dhanwan' brand under its agro-machinery division.
Sources said Texmaco had initiated discussion with reputed foreign tractor manufacturers for a possible tie-up.
"The company is discussing it with leading players in tractor market globally," said sources.
According to sources, K K Birla group is now looking at all options from a technical tie-up to form a joint venture through Texmaco for the tractor facility.
The engineering outfit has started negotiations with an engineering research institute for the project.
"The division is in active negotiation with an engineering research institute for manufacture and marketing of a small low-priced tractor to meet the needs of middle class farmers and also to expand the product range," added sources.
Sources argued that despite stiff competition from cheap Chinese power tillers, the company's power tiller is gaining market share.
"This could be repeated in tractor also," sources claimed.
There is an indication that the tractor manufacturing facility would be situated at its Belgharia location, at the outskirts of Kolkata.
However, sources maintained that Texmaco has yet to decide on investment and time-frame of the proposed tractor project.
"It is under active consideration but nothing has been finalised yet," added sources.
According to sources, during the year the company has acquired through auction the ownership of 12 acre land at its Panihati facility.
"The company had spend Rs 9 crore (Rs 90 million) on it," added sources.
Texmaco had posted a net profit of Rs 19 crore (Rs 190 million) over a turnover of Rs 315 crore (Rs 3.15 billion) in 2005-06.
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