KARACHI, Dec 4: Millat Tractors Limited, the producers of Massey Ferguson brand of tractors, have acquired the assets of Rex Barren Batteries Limited for Rs13.55m, by making the highest bid at the auctioneers — the Corporate & Industrial Restructuring Corporation (CIRC).

At the annual shareholders’ meeting scheduled to be held at the company’s registered office in Lahore on December 28, Millat would ask members to approve the deal. The assets of Rex Barren, located in Kasur included land measuring 16 kanals and 18 marlas with covered area of 22,750 sq.ft and machinery/equipment capable of producing 60,000 batteries of different sizes.

Millat would also ask shareholders to approve the additional investment of Rs16.45m for setting up and renovation/updating of the acquired assets. And all that would be consolidated into the formation of a wholly owned subsidiary company, which is proposed to be named, Millat Industrial Products (Pvt) Limited. The subsidiary would hold authorised capital of Rs50m.

The company stated that initially, the project envisages producing of automotive batteries using assets acquired through CIRC. “For the batteries project, the total investment including revamping/start up etc., shall not exceed Rs30m”, the company said and added that the venture would be wholly financed through company’s own sources. The project might start commercial production within four to five months. Approximately a quarter of all production would be utilized in the Millat Tractors products, while the balance would be sold in the after sale market.

After securing the shareholders’ approval in an earlier meeting, Millat had also bought 0.266m shares of Bolan Casting Limited at Rs35.95.

Auto sector analysts are looking at Millat Tractor’s investment in automotive batteries production, with a great deal of interest. Analyst at a stock brokerage house observed that with agriculture contributing to as much as 25 per cent of Pakistan’s GDP, market for the agricultural machinery & equipment is envisaged to post annual growth of 8-10 per cent in the future. Analysts said that an encouraging feature of the country’s tractor industry was that it had achieved as much as 87 per cent deletion which was why the tractor vending industry in the country was highly developed.

All that while the tractor industry was ploughing ahead under uncertain times. The total tractor sales in the financial year 2000 had dropped by 6.3 per cent to 31,121 units, from 34,559 tractors sold in 1999 and there was the grim possibility that only half as many tractors as last year, may roll out of the production lines during the current year. Millat Tractors — the largest player in the industry — posted profit of Rs288m in financial year 2000, reflecting 10 per cent improvement from a year ago profit at Rs262m. The company’s sales, however, declined 4 per cent to Rs5,452m, from Rs5,679m last year.