Financial Daily from THE HINDU group of publications
Tuesday, Nov 25, 2003
Financial Daily from THE HINDU group of publications Tuesday, Nov 25, 2003 |
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Corporate
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Mergers & Acquisitions Escorts to buy out US subsidiary Neha Kaushik
New Delhi , Nov. 24 ESCORTS Ltd has chalked out an aggressive strategy for the North American and European markets in its bid to emerge as a major player in the global arena. The company is planning to buy the stake of its joint venture partner in Long Agribusiness LLC, the Escorts subsidiary in the US, by December this year to gain 100 per cent management control in the subsidiary. Escorts, which owns 49 per cent in Long Agribusiness, however declined to disclose the sum it would be paying its joint venture partner, Alverez & Marcell Inc, to close the deal. "The name of the American subsidiary would subsequently change to Farmtrac," Mr Rakesh Chopra, Business Head - Agri Machinery Group, Escorts Ltd, said. Escorts sources tractors from LG in Korea, India and Universal Tractors in Romania for the US market. While its focus is on the hobby tractor segment (35 HP to 75 HP) in the US, Escorts is also sourcing sub-30-HP tractors from LG to address the `garden tractor' segment in the country. Meanwhile, keeping in mind the new emission norms setting in for engines in the US in 2008, the company is investing towards readying the compliant engines by 2007. "The total investment towards the development of the engines would be about Rs 35-40 crore. We have already invested about Rs 5 crore on the same this year," Mr Chopra said. Escorts is aiming to scale up its exports to the American market in the coming years, and already has a distribution network of 300 dealers in place in the country. Similarly, Escorts is targeting to capture market share in the European market next year through its Polish subsidiary, in which it has 65 per cent stake. "With Poland joining the European Union next year, we are looking to export our tractors to various countries in the region. We have developed a four-wheel drive tractor for the market and are in the process of homologating it. In the first phase, we are looking to launch in countries such as Germany, Austria, Spain, Portugal and Italy," Mr Chopra said.
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