Kubota Invests in Indian Tractor Manufacturer Escorts Limited
— Accelerating its Business in the World’s Largest Tractor Market —
Corporation (Headquarters: Naniwa-ku, Osaka, Japan; President and
Representative Director: Yuichi Kitao; hereinafter, “Kubota”) announced today
that it will invest in an Indian leading tractor manufacturer, Escorts Limited
(Headquarters: India, Chairman and Managing Director: Nikhil Nanda;
Through this investment, Kubota intends to increase its presence in India – the
world’s largest tractor market – as well as its commitment to the competitive
tractor market, which has massive growth potential, thus further expanding its
produced by EL started distributing through Kubota’s sales network in
- Background and aims
- The tractor market in
India is one of the world’s largest in terms of unit sales and expects to
expand further. In 2008, Kubota established Kubota Agricultural Machinery
India Pvt. Ltd. (hereinafter, “KAI”) as a foothold in the Indian market.
- At present, local
manufacturers are playing key roles there, and they are all enhancing
partnerships with foreign-affiliated manufacturers. In February 2019,
Kubota established a joint-venture tractor manufacturing company with EL
and mass production is due to start this July.
- Through this capital
tie, the two companies intend to deepen their cooperative relationship
further and, by leveraging each other’s strengths, create synergy across a
broad range of their business, including development, production, sales,
distribution, and parts procurement, in a bid to extend their reach in the
- Meanwhile, the
competitive tractors which currently form the core of the Indian tractor
market, are gaining popularity in other markets around the world. Kubota
hopes to expand its global reach in those model market by tapping into
EL’s parts procurement networks and capability to reduce cost.
- EL will issue new
equity shares to Kubota on a preferential allotment basis (subject to
shareholders’ and necessary regulatory approvals) pursuant to which Kubota
will hold 9.1% of EL’s paid up share capital.
- The total amount of
investment will be approximately 16 billion yen.
- Subsequent to the
preferential allotment to Kubota, EL will undertake a reduction of its
share capital from the shares held by the Escorts Benefit and Welfare
Trust (subject to receipt of necessary approvals) of such number of equity
shares as are being issued to Kubota under the preferential allotment.
Post the capital reduction, Kubota’s stake in EL will increase to 10%.
- About the investee
|Company name||Escorts Limited|
|Representative||Nikhil Nanda, Chairman and Managing Director|
|Location||Faridabad City, Haryana State, India|
|Year of establishment||1944|
|Business|| Manufacture and sales of agricultural equipment,|
construction equipment, and railways-related equipment
|Sales|| Approx. 100.0 billion yen (approx. 62.0 billion|
rupee; for the year ended March 2019)
|Number of employees|| 11,000 (including non-regular employees, current|
as of December 2019)
- Future developments
- After going through
the necessary procedures and subject to receipt of requisite approvals,
the investment is likely to be completed by June 2020.
- To further facilitate
and strengthen the collaboration with EL, Kubota will sell 40% of stake in
KAI to EL, in addition to this investment.
- Going forward, Kubota
aims to establish a joint research and development center with EL to
develop products that are optimized for the local market and shorten the