Companies: TRK   

Vehicle gearbox technology innovator Torotrak has agreed to license its 'infinitely variable transmission' technology to India's £4.5 billion Tata Motors.

Under the agreement, Tata has bought non-exclusive rights to develop and manufacture transmissions containing Torotrak's technology in four categories of vehicle: passenger cars, light commercial vehicles, medium and heavy commercial vehicles, and construction equipment. Commercial details of the royalties payable to fully listed Torotrak have not been disclosed and the agreement awaits approval from the Indian Government, but, given the scale of Tata's operations, it could bring significant benefit to Torotrak.

Run by chief executive Dick Elsy, Torotrak, which lost a halved £3.2 million in the year to March, claims to be a world leader in 'toroidal' traction-drive technology, which it is argued both improves vehicles' performance and cuts running costs. The company, whose shares topped £4 at the beginning the decade, has had a tough time developing and winning acceptance of the technology, but deals like this suggest encouraging progress is now being made.

The shares hit bottom at 22p last year, but have rallied modestly since then. Torotrak raised £6.75 million at 30p in July and now stands at 34.5p, up 6.5p this morning, which values it at £50 million.

If the Tata deal bears the hoped-for fruit and, even more, if it is followed by others, the rally could gather pace.

Growth Company Investor is the UK’s leading authority on small-cap and AIM companies. You can gain immediate access to all the recent share recommendations with no-obligation, with a free 30-day trial. Click here to join today.

Torotrak	LSE	£18.26m	12.50p	-0.25p
Click here for interactive charting
Other company articles:
Torotrak clinches Tata deal			01/10/2007
Torotrak sees mowing breakthrough			18/12/2006
Will there be jam tomorrow?			03/08/2005
Torotrak			12/07/2005
The New Wave Technology Companies			01/04/2003