OREANDA-NEWS. March 05, 2008. Concern Tractor plants announced about its intention to create joint venture for engines manufacture with AGCO Corporation (NYSE: AG), a world producer and supplier of agricultural equipment. JV will become exclusive supplier of engines at the markets of Russia and CIS countries. Engines of 80 - 350 hp are corresponding to the Tier II and Tier III standards, reported the press-centre of Concern Tractor plants.

On 28 of December 2007 by parts have been signed Memorandum of understanding according to creation of joint venture. The agreement will be accompanied by the order from the Concern “Tractor plants” on 750 engines SISU produced at the AGCO plant in Finland, which have to be delivered during 2008 for test installation and development program. Participants of the agreement will receive 50% share each in joint capital of joint venture. Future enterprise will be situated at one of the Concern’s enterprise in Vladimir.

Joint venture of the Concern Tractor plants and AGCO will become the first company at the markets of Russia and CIS countries that produces industrial assembly of three, four and six cylinders water cooled import diesel engines in the amount of 6 models in the volume of 20 000 units per year. The beginning of the production is intended for the 4 quarter 2008, reach of rated capacity - in 2012.

Work schedule foresees localization of components, organization of service of diesel engines. Engines produced at the new plant will be used as for Concern Tractor plants needs as also will be sold to the third parties at the markets of Russia and CIS countries. The engines will be produced under SISUDiesel (ТМ) license using modern technologies. They will be intended for agricultural equipment, generator sets, municipal machines, water transport and road building machines.

According to the President of the Concern “Tractor plants” Mikhail Bolotin, “Decision about creation of joint venture is stipulated by objective needs of Russian and CIS countries markets in modern multipurpose diesel engines of 80-290 hp. And exactly in this diapason at the Russian market there is a gap as the result of power augmentation of batch produced diesel engines. Usage of modern technical decisions of world level will allow to increase reliability and export potential as Concern’s products so as other native potential consumers of these engines”.

In parallel with organization of assembly plant at the Russian joint venture, Concern Tractor plants will make significant investments in manufacture of number of general components at the existing plants. To the localization in Russia of the most responsible configurations will be attracted famous world producers. Cooperation in this field is planned by way of creation of joint ventures for components.

According to Mikhail Bolotin: “The main macroeconomic advantage is that steps that are planned under the Agreement will allow to fasten availability of competitive native agricultural equipment that in its turn will support national target of agricultural productivity improvement and providing of food safety of Russia”.