Escorts Kubota Announces Rs 4,500 Cr Investment Plan for New Plant in 3-4 Years

Escorts Kubota Ltd plans to invest Rs 4,500 crore over the next three to four years to establish a new manufacturing plant. According to Bharat Madan, the company's full-time director and CFO are currently in discussions with the Rajasthan government for a site in Ghiloth. The purpose is to double their domestic tractor production capacity to 3.4 lakh units per year. Additionally, they plan to introduce new engine and construction equipment lines gradually.

New Growth Initiative: Expanding Capacities and Infrastructure

Madan explained to PTI that the greenfield plant will encompass doubling tractor production capacity. They will also establish new engine and construction equipment lines in phases. In total, he expects the greenfield project to cost between Rs 4,000 crore to Rs 4,500 crore over the next three to four years.

He added, "This year, we plan to acquire land, which might cost around INR 400 crore to INR 450 crore, and then initiate construction by the end of this fiscal year.”

Currently, the company's total annual tractor production capacity is 1.7 lakh units. Its primary plant is situated in Faridabad. Wherein its engine production capacity is 1.5 lakh units per year. However, Kubota engines are currently being imported. Madan mentioned that the normal capital expenditure (capex) for FY25 would be around INR 300 crore.

Regarding tractor sales outlook for FY25, he stated that the industry anticipates "a mid-single digit growth," with demand likely to pick up momentum only in the second half of the fiscal year.

He noted, "The first quarter is expected to be soft. We don't anticipate any growth during this period. April has remained mostly flat, and May has shown some decline. Therefore, overall, the first quarter is projected to experience a decline."

Furthermore, depending on the distribution of the monsoon, he mentioned that the industry could witness some recovery from September onwards. Regarding Escorts Kubota, he expressed the company's aim to outperform the industry and maintain its market share growth, as it did in FY24.