Escorts Kubota plans to invest Rs 4,500 cr in new plant in coming years

Farm and construction equipment manufacturer Escorts Kubota Ltd plans to invest up to Rs 4,500 crore over the next three to four years to set up a new manufacturing plant, according to its whole-time director and CFO Bharat Madan.

The company is currently in talks with the Rajasthan government for a site at Ghiloth, where it intends to set up the greenfield plant to double its domestic tractor production capacity to 3.4 lakh units annually, while also setting up new engine and construction equipment lines in phases.

“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,” Madan told PTI.

He further said, “This year we expect to procure land which may cost Rs 400 crore to Rs 450 crore and then start construction by the end of this fiscal.

At present, the company has a total annual tractor production capacity of 1.7 lakh units. The main plant is located in Faridabad. Its engine production capacity is 1.5 lakh units annually with Kubota engines currently being imported.

Madan said the normal capex for FY25 will be around Rs 300 crore.

On the tractor sales outlook for FY25, he said the industry is expecting “a mid-single digit growth” with demand pick likely to gain momentum only in the second half of the fiscal.

“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 said.

Depending on monsoon distribution, he said from September onwards the industry could see some recovery.

For Escorts Kubota, he said the company is looking to grow better than the industry and continue to gain market share as it has done in FY24.

First Published: May 12 2024 | 12:05 PM IST