The Hindu Business Line : Escorts to raise $70 m; posts Rs 6.71 cr net

Looking ahead
To introduce 4 new products in next 6 months.
Priority is to enter newer markets within India.
To concentrate on global expansion as well.
Optimistic about non-tractor growth sector.

New Delhi April 27 Escorts Ltd is looking at raising $70 million in the next two-three months. The equity raised would be used to fund the company's future expansion plans and retire its remaining debts.

"Fifty per cent of the equity raised would be through future convertible bonds and the other 50 per cent through direct equity (from private investors)," Mr Rajan Nanda, Chairman, Escorts Ltd, told Business Line on Thursday.

The company, which currently has 45 variants of tractors from 25 to 80 hp, is looking at introducing four new products in the coming six months. "We at the moment are not going in for any capacity expansion but are looking at optimising the existing production facilities. And in continuation with the policy of the company to upgrade its tractors by phasing out the old versions we are looking at launching these four new products," Mr Nanda said.

Escorts, for the second quarter ended 31 March 2007 (the company follows a October-September financial year), has posted a net profit of Rs 6.71 crore as compared to a net loss of Rs 16.18 crore in the corresponding previous quarter. The company's net sales for the second quarter rose 32 per cent to Rs 574 crore as compared to Rs 435 crore in the corresponding previous quarter.

"This is the second consecutive good quarter that the company had and we expect to build on this in the coming two quarters. Moving forward we expect a 20-25 per cent growth in revenues for the third quarter and an increase of around 50 per cent for the full year," Mr Nanda said.

According to him, the main driver for the company coming into the black was the sale of tractors picking up 24 per cent from 11,970 to 14,795 for the quarter ended 31 March 2007.

Mr Nanda also said that the company in the coming years would concentrate on expanding its footprint globally.

"We have two subsidiary companies — one in North America and the other in Poland. We expect the North American subsidiary to increase its sales in the region first and also cater to the Latin American region and the subsidiary in Poland to cater to the European market. Apart from this we also export to Africa. But the first priority will be to enter newer markets within the country and then look to expand globally," he added.

Though the tractors segment of the company contributes about 95 per cent to the turnover, Mr Nanda said that the company is optimistic about the other segments — agri-machinery, railway equipment and auto components — to improve their revenues.

"The company's subsidiary, Escorts Construction Equipment Ltd's (ECEL) Ballabgarh (Haryana) plant will be operational by December. The total investment is between Rs 40 and Rs 60 crore and has been funded through private equity," Mr Nanda said.

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