Page 26 - IACC Newsletter November 2012 Issue no. 7

Basic HTML Version

The center would conduct research and engineering in cancer treatment and radiochemistry and other technology
applications in healthcare, locomotive engines, heavy earth moving equipment and equipment for the energy sector,
said Gopichand Katragadda , MD, GE India Technology Center (John F Welch Technology Centre).
The center, established in September, 2000 here, is GE's first and largest integrated multi-disciplinary R&D and
engineering center outside the US. Investing heavily in advanced IT-enabled laboratories, the center is among the
leading engineering innovation across GE's diverse businesses.
The GE's John F Welch Technology Centre is set to touch 5,000 employees by the end of the year, according to
Katragadda. Meanwhile, over the last decade, the Centre alone has contributed to over 1,850 patents being filed by GE,
the parent company.
GE has been trying to get to 15-20 per cent savings in many of the devices it has been manufacturing. According to
industry sources, the cost savings on many of the products through defeaturing has been to the tune of 50 per cent or
more in many products. The company has particularly been aggressive in the healthcare sector. It has been able to
remove two-thirds on the costs in the case of many devices.
Meanwhile, the company is investing about $200 million in a manufacturing facility in Pune.
Blackstone Capital Partners to buy 12.5% stake in International Tractors Limited
for Rs 520 crore
The Blackstone Group on Monday announced that its affiliate, Blackstone Capital Partners (Singapore) VI, has signed an
agreement to acquire 12.5% of International Tractors Limited (ITL) in a structured transaction for up to Rs 520 crore, or
$100 million.
The flagship company of the Sonalika Group, ITL is a leading manufacturer of tractors under the brand name 'Sonalika'. It
manufactures tractors from a power range of below 20 HP to over 90 HP. "There is significant amount of potential for
Sonalika to grow in market share. In the last one year too, the company had increased its share," Akhil Gupta, Senior
Managing Director and Chairman of Blackstone India told ET over phone.
This deal is in line with Blackstone's past investments in the Indian agri sector. The private equity firm has invested in
Nuziveedu Seeds and FINO, a micro-finance firm - companies that are adding value to the lives of the Indian rural
population. India currently has one of the lowest agricultural yields in the world. Mechanized farming using tractors will
enable huge improvement in India's agriculture productivity which is the private equity firm's rationale for investment in
the firm.
Incorporated in 1995, ITL has an annual turnover of $500 million. It currently has about 10% share in the domestic
tractor market. In addition, ITL exports tractors to over 70 countries. "We believe in fundamentals, farm incomes are
rising, minimum support prices are going up and with the shortage of labor, and there is a need for modernization. We
expect the tractor market to grow by 10% CAGR over the next five years," Gupta reasoned on why Blackstone picked up
a stake in a tractor manufacturer. Blackstone's MD said the company intends to stay invested for the next 5-7 years, a
typical time frame for private equity firms to stay invested in a firm. Blackstone has been an aggressive investor in India,
having acquired sizeable stakes in Gokaldas Exports, All Cargo and CMS Info Systems etc.
"Blackstone has identified rural and agro-based companies as a key area of growth, and the investment in International
Tractors is a step in that direction," Gupta said. ITL, founded by LD Mittal (Chairman), AS Mittal (Vice-Chairman) &
Deepak Mittal (MD), is headquartered in Delhi while its core manufacturing plant is in Hoshiarpur in Punjab. "In addition
to helping us scale up our operations, this deal will provide us access to Blackstone's global best practices," Chairman LD
Mittal said. Over the last six months, when the overall growth rates of the industry has remained flat to negative,
International Tractor Limited has posted a growth of 17% by selling approximately 25,000 units in domestic market,
increasing its domestic market share by 1.5%, said the company. By November, the company also intends to enter UK,