Escorts Kubota Plans New Manufacturing Facility in Uttar Pradesh

Key Highlights:

• Escorts Kubota plans a new manufacturing facility in Uttar Pradesh.
• The company will invest INR 4,500 crore, starting in 2028.
• The facility aims to generate INR 10,000 crore in revenue and create 14,000 jobs.
• Shares rose 2.13% on BSE, closing at INR 3737.60.
• Funding comes from a previous share issue and internal funds.

Escorts Kubota is moving on with plans to build a Greenfield manufacturing site to boost its present capacity for future growth.

The company has filed an Investment Intent with the Government of Uttar Pradesh for land purchase. This news follows the company's prior withdrawal of plans to develop a new manufacturing factory in Ghiloth, Rajasthan, due to unmet important requirements.

Escorts Kubota intends to invest around INR 4,500 crore in phases. On Friday, the company's shares closed 2.13% higher on the BSE Sensex at INR 3737.60 each. The company intends to acquire 250-300 acres of land to expand its tractor and engine manufacturing capacity. 

When fully operational, the new facility is estimated to earn more than INR 10,000 crore in yearly output revenues. The initiative also hopes to generate over 14,000 direct and indirect jobs. The expansion will be phased in, beginning in 2028.

Funding and Future Growth

The investment for this project will be financed through funds raised from a previous preferential share issue to Kubota Corporation, Japan, along with internal accruals. 

Escorts Kubota's current production capacity stands at 1.70 lakh units, including 50,000 units from its joint venture with Escorts Kubota India Private Limited. The company reported a capacity utilization of 66% for FY24.

This investment intent is awaiting the appropriate approvals. At present, the company has the ability to produce 1.70 lakh tractors and engines, which includes 50,000 units from its partnership with Escorts Kubota India Private Limited. For fiscal year 24, the company recorded a 66% capacity utilization rate. 

"The latest announcement comes after the company previously informed about withdrawing its plan to establish a new manufacturing plant in Ghiloth, Rajasthan, due to the inability to meet all the essential criteria for a large-scale project," the organization reiterated. 

This new shift is part of the company's efforts to improve its manufacturing skills and plan for future expansion.

Also Read: Eknath Shinde Inaugurates Electric Tractor on Independence Day

CMV360 Says

This move by Escorts Kubota reflects its commitment to long-term growth and expansion. The new facility, once operational, will boost the company's production capabilities and support its future growth plans, while also contributing to job creation and economic development in the region.