NEW DELHI, Dec 4: Carraro India Ltd, a 51:49 joint venture between the $200-million Carraro SpA of Italy and the Rs 1,650 crore Escorts Ltd, has tied up its entire debt with IFC Washington and Exim Bank.

Company sources said that the Italian major which commands around 25 per cent of the world market of axles for tractors and construction equipment, has entered into an agreement with Escorts under which it would buy back nearly 50 per cent of the company's production and sell to markets abroad.

Carraro supplies axles and gearboxes to major tractors companies such as Fiat, Renault, John Deere, Case USA and New Holland and in all major markets the world over.

Export of axles and other transmission equipment of tractors will provide a natural hedge to adjust against possible foreign currency fluctuation, which would have otherwise escalated the cost of debt, sources added.

Carraro SpA would help Escorts to introduce a special range of tractors from 60 to 85 HP at par with global standards in 1998.

The transmissions and axles produced by Carraro India for 50 HP and above tractors will be bought by Escorts Ltd for its tractors. Agritalia SpA, part of the Carraro group, will provide technological support to 70 to 80 HP tractors which will be launched next year. Sources said that four prototypes are already being tested.

Besides supplying axles and transmission, which are major constituents of tractors to Escorts Ltd, Carraro India will also sell to all tractor manufacturers. The cost of the project is Rs 80 crore, out of which Rs 40 crore is equity. Land for the project has been acquired in Pune. Commercial construction would commence in the next fiscal.

Escorts Ltd is launching its 30 and 35 HP series and has already launched 40 HP new series of tractors.

The high HP tractors (50 HP and above) will cater to the southern markets. The joint venture will also support Escorts Ltd to upgrade axles and transmissions for the full agri-machinery range including those which are currently produced. Escorts Ltd has a presence in the 25, 35, 40 and 45 HP tractor range, and Farmtrac range which includes three tractors in the 50 HP segment. Next year, the company is planning to launch tractors in the 25 HP, 60 HP, 70 HP and 80 HP segment.

The 25 to 25 HP range will also be upgraded which will be powered with three cylinder eng ines. Escorts Ltd has targeted sales of 51,000 tractors this year and 61,000 in 1998-99. By 2000, it expects to manufacture around 70,000 tra ctors. The company posted a record sale of 43,442 tractors (Escort and Farmtrac) in 1996-97, up 12.8 per cent from 38,519 in the previous year.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.