Depressed gearbox technology innovator Torotrak aims to start producing 100,000 lawnmowers from March in a £2.7 million US joint venture.

Private US group MTD, which makes upmarket ‘ride-on’ self-drive mowers and is number three in the US mower market, is funding the 50-50 joint venture, ‘Initrak’, which will produce mowers incorporating Torotrak’s ‘Infinitely Variable Transmission’ (IVT) technology to the tune of £75 to £150 per £400 to £1,500 mower. Dick Elsy, the former Jaguar luminary who became chief executive of Leyland-based Torotrak three years ago, says IVT will significantly enhance the fuel economy of the mowers, cut their noxious emissions and enhance their control and manoeuvrability.

Arguing ‘there is more margin with a ride-on lawnmower than a Ford Mondeo’, Elsy claims the joint venture should be able to triple annual production at Lichfield, Kentucky, to 300,000 ‘units’ in three years. He suggests success with ride-on mowers should lead to openings in the small car market, as well as in tractors, where precision of speed, direction and braking is highly desired but hard to achieve with current models.

Fully listed Torotrak, whose shares have fallen from nearly £4 in 2000 to below 40p now amid persistent losses, has suffered from its inability as yet to make a breakthrough into the premium car market. Elsy says the company, which still has £5.4 million cash after losing a reduced £1.5 million in the six months to September, has suffered because premium car makers are making such fat margins on six-speed gearboxes that they have scant incentive, environmental issues apart, to raise their game with IVT.

That will change, he argues, when six-speed gearboxes become ‘commoditised’ and low-margin. Meanwhile, lawnmowers, small cars, tractors and other applications should fill the gap, as well as consultancy fees, which enabled Torotrak to rake in £1.8 million of first-half revenues.

The company is also talking about potential deals to Japan’s leading gearbox maker and to a ‘leading’ Asian small car producer, says Elsy. At 36.5p, up from July’s 22p low, Torotrak shares, while clearly speculative, could offer significant recovery potential if the Initrak joint venture and other deals under negotiation bring home the bacon - and cash - before the company’s present resources run out.

Torotrak	LSE	£18.26m	12.50p	0.00p
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