Escorts has formed a joint venture (JV) with Japan’s Kubota Corporation to produce high end tractors for domestic as well as overseas markets, the engineering and farm equipment maker announced on Monday.
The JV — Escorts Kubota Private Limited, in which the Indian firm will hold 40% share and the Japanese firm 60% — will leverage Kubota’s technology and Escorts’ frugal engineering expertise to manufacture efficient, value-oriented utility tractors, according to the two companies.
Escorts and Kubota will invest Rs 300 crore to create initial capacity of manufacturing 50,000 tractors in India, they said, and target a market share of 22% in the Indian tractor market in the next couple of years.
“We will jointly utilise the fresh capacity,” Escorts chairman Nikhil Nanda told ET. “In India, we will use our individual distribution network to market our products. Globally, we can utilise Kubota’s channel to sell our products.”
Kubota Corporation specialises in agriculture, water and living environment products, and has a presence in more than 100 countries. It has already commenced discussions with distributors to sell Escorts products in South Africa, said company executives.
The two partners also plan to co-develop new products, which may be marketed under a new brand in India as well as abroad.
The investments made towards developing new products will be over and above the Rs 300 crore being ploughed in to create fresh capacity, according to the companies.
Masatoshi Kimata president of Kubota Corporation said, “Our first priority is the Indian market… Together we will cater to India and other growing economies which require high-end technology and new age tractors for growing demands of highly mechanised farming.”
Source: Economic Times