Magma and Sonalika enter into Joint-Venture

Magma Shrachi Finance Ltd and International Tractors Ltd, manufacturers of "Sonalika" - a leading tractor brand - on August 10, 2007 signed a memorandum of understanding (MoU) at a city hotel to form Magma ITL Finance Ltd - a joint venture asset financing Company for financing the Sonalika range of tractors. The M0U was signed by Mr. Sanjay Chamria, Vice Chairman & MD of Magma Shrachi and Mr. L D Mittal, Chairman of International Tractors in the presence of the media and senior management teams of both Companies. Magma will hold 74% shareholding in the new Company while 26% will be held by International Tractors.

Speaking on the occasion, Mr. Sanjay Chamria, Vice Chairman & MD of Magma Shrachi said "The tie-up is in line with Magma's focus on rural markets. Magma has already established deep penetration into the hinterlands with 49% of its 155 branch network being in rural India. Our significant presence in this market combined with a strong base of loyal rural customers, who the Company is already serving through other products such as commercial vehicle, Utility vehicle loans etc., will help the joint venture ramp-up its operations quickly and also enable the new Company to look at other financing opportunities in the agri-sector in future. The joint venture will ride also on the strong distribution and dealer network of Sonalika to establish its footprint very quickly to provide the coverage within a short period of commencement of operations and proposes to benefit a lot", he added, "The objectives of the new Company are fully aligned with India's need to lift growth rates in the agricultural sector through better technology and funding", added Mr. Chamria.

The vision of the new co is to provide funding to the farming community all over the country for purchase of tractors and other equipments which they need for agriculture and allied purpose and also extend allied services like insurance etc which they are currently not served well.

The new Company will be headquartered in Delhi and would start functioning shortly.

The stock was trading at Rs.220, down by Rs.1.45 or 0.65%. The stock hit an intraday high of Rs.222 and low of Rs.220. The total traded quantity was 1533 compared to 2 week average of 9341.

Source : Equity Bulls

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