Kubota Invests in Indian Tractor Manufacturer Escorts Limited

    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;
    hereinafter, “EL”).

    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
      Indian market.
    • 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.

    Investment scheme

    • 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
      development period.