Escorts Kubota Ltd., a leading manufacturer of farm and construction equipment, has unveiled plans to invest up to Rs 4,500 crore over the next three to four years in establishing a new manufacturing plant. Bharat Madan, the company’s whole-time director and CFO, revealed this strategic initiative aimed at expanding its production capacity and diversifying its product lines.
The company is currently engaged in discussions with the Rajasthan government for securing a site at Ghiloth, where it intends to build the greenfield plant. This new facility will serve as a cornerstone in doubling the domestic tractor production capacity to 3.4 lakh units annually. Moreover, Escorts Kubota plans to initiate the setup of new engine and construction equipment lines in phases as part of this ambitious project.
Madan provided insights into the scope and timeline of the greenfield plant, stating, “The greenfield plant will involve doubling tractor production capacity, setting up a new engine line, and a construction equipment line in phases. Overall, the greenfield project may cost Rs 4,000 crore to Rs 4,500 crore over the next three-four years.” He further outlined plans to acquire land, with an estimated cost ranging between Rs 400 crore to Rs 450 crore, and commence construction by the end of the current fiscal year.
Currently, Escorts Kubota operates with a total annual tractor production capacity of 1.7 lakh units, with its primary plant located in Faridabad. Additionally, the company’s engine production capacity stands at 1.5 lakh units annually, with Kubota engines currently being imported.
Madan also shed light on the company’s capital expenditure projections for FY25, indicating a normal capex of approximately Rs 300 crore. Regarding the outlook for tractor sales in the fiscal year, he expressed expectations of “a mid-single digit growth,” with demand likely to accelerate in the latter half of the year following a soft start.
Madan noted, “First quarter obviously is soft. We don’t expect any growth in the first quarter. April has been more or less flat, and in May, we have seen some degrowth. So the first quarter overall will still be a degrowth.” He highlighted the potential for recovery post-September, contingent upon favorable monsoon distribution.
In terms of market positioning, Escorts Kubota aims to outpace industry growth and sustain its market share expansion achieved in FY24, positioning itself as a key player in the evolving landscape of farm and construction equipment manufacturing.
