How is Indian Tractor Market Getting Impacted by Kubota-Escorts Deal

Kubota, a Japanese tractor and heavy equipment manufacturer, intends to raise its stake in Escorts, a Faridabad-based company.

This might help the firm become a major participant in India's tractor market, which is the world's largest. The Osaka-based corporation is expanding its shareholding from 9.09 percent last year to 53.50 percent with a fresh investment of Rs 9,370 crore.

By March 2022, the extra Escorts shares will be bought through a third-party allocation and open offer bids, according to Kubota. Escorts Kubota Limited will be the company's new name.

Mahindra & Mahindra has a 40 percent market share, whereas Escorts is the country's fourth-largest operator with a 12 percent market share.

Kubota hopes to gain a 24 percent market share in India by 2030 as a result of this strategy. "The united company and the broader partnership will deliver innovative agricultural mechanisation solutions to address global food security and increased farm production," stated Yuichi Kitao, President and Representative Director of Kubota, Japan.

Nikhil Nanda, on the other hand, will remain Chairman and Managing Director of Escorts and will oversee the company's next phase of growth with the present group of Key Managerial Persons (KMPs), according to a BSE filing.

Kubota, a global tractor and machinery company with a market capitalization of $24 billion, stated that through this partnership, Escorts will have access to global best practises and state-of-the-art research and development facilities, which will complement Escort's proven strengths in engineering and execution to deliver high-quality, cost-effective solutions in India and around the world.

One of the Largest India - Japan Agriculture Partnerships:

According to the release, this agreement would build one of the largest India-Japan agriculture partnerships in order to achieve worldwide leadership in the Farm Equipment Sector.

Furthermore, Escorts will be the exclusive vehicle for the manufacture and sale of certain products in India, as well as sourcing from India (both existing and jointly developed products in the future), according to the statement. This will seamlessly integrate Kubota's global reach with Escorts' proven capabilities in frugal engineering and manufacturing.

"By exploiting one other's capabilities - whether in technology, market access, manufacturing processes, or technical expertise - both firms will be able to increase the value they have generated." Escorts is positioned to become an institution that will serve Indian and global farmers for decades, if not centuries, as a result of this," Nikhil Nanda, CMD, Escorts Limited, said. 

"While Escorts is renowned for its larger India footprint and demonstrated skills in cost-effective engineering and manufacture," he continued," Kubota delivers world-class processes, global access, and knowledge."

By 2023, the worldwide tractor market is expected to generate over 2.8 thousand units, with a CAGR of roughly 5% from 2017 to 2023.

The company's electric vehicle expeditions might also assist India. Kubota has showcased electric tractor and mini excavator prototypes.

The corporation is already considering investing in electrically powered equipment research and development, such as motors, inverters, and battery packs. Kubota's smart tractors might be seen revving up on India's fields tomorrow.