Escorts Kubota to invest up to Rs 4,500 crore in setting up new production plant

13 May 2024 , 12:18 PM

Escorts Kubota Ltd, a manufacturer of farm and construction equipment, aims to invest up to ₹4,500 Crore over the next three to four years to establish a new production plant, according to Bharat Madan, the company’s full-time director and CFO.

The company is currently in talks with the Rajasthan government about establishing a greenfield facility in Ghiloth to quadruple its domestic tractor production capacity to 3.4 lakh units per year, as well as phased expansion of new engine and construction equipment lines.

Madan stated that the new plant project will include expanding tractor production capacity, establishing additional engine and construction equipment lines gradually. In total, the greenfield initiative is estimated to require an investment ranging from ₹4,000 Crore to ₹4,500 Crore within the next three to four years.

He added, “This year, we intend to purchase land for ₹400 Crore to ₹450 Crore and begin building by the end of the fiscal year.”

Currently, the company’s total annual tractor production capacity is 1.7 lakh units. The main plant is located in Faridabad. Its engine production capability is 1.5 lakh units per year, with Kubota engines currently being imported.

Madan stated that the normal capex for FY25 will be approximately ₹300 Crore.

On the prognosis for tractor sales in FY25, he stated that the industry expects “mid-single digit growth,” with demand picking up only in the second half of the fiscal year.

He mentioned that the initial quarter is anticipated to be slow, with no projected growth. April remained relatively stagnant, and May has shown a slight decline, indicating an overall downturn in the first quarter. However, he added that depending on the distribution of the monsoon, there might be some industry recovery starting from September onwards.

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