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Wednesday, Apr 28, 2004

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Escorts to leverage Polish arm to boost exports to Europe

Neha Kaushik

New Delhi , April 27

TRACTOR major Escorts Ltd is keen to develop its Polish subsidiary as a supply base for all of Europe, with Poland set to enter the European Union on May 1.

Escorts has a 65:35 joint venture in Poland with Polish company Pol-Mot Holding, called Pol-Mot Escorts Spolka ZOO. However, the name is currently in the process of being changed to Farmtrac Europe.

"We will definitely use our assembly unit in Poland as a low-cost supply base for Europe, with the country set to become a EU member. Two of our tractors would be receiving homologation by June, and another two by September. In addition, Poland itself is a fairly large market, and we have been doing quite well in the country," Mr Rakesh Chopra, Business Head - Agri Machinery Group, Escorts Ltd, said.

In the first phase, Escorts is planning to export tractors to Spain, Portugal, Austria and Germany, to be followed later by France and Italy.

"We are targeting to sell about 1,000 tractors in Europe this year. The tractors being exported to the region are in the 40 HP to 80 HP range. We would start off with exporting utility tractors from India, followed by garden and vineyard tractors and later on compact tractors sourced from LG Korea," Mr Chopra said.

Escorts has invested about $2 million in the Polish joint venture till date.

The company also has a subsidiary in a 49:51 joint venture with Alverez & Marcell Inc in the US, and is in the final stages of purchasing its partner's 51 per cent stake in the company. About 65 per cent of Escorts' tractor exports are to the North American market. Escorts is targeting to export about 6,000 tractors from India in the current year.

Meanwhile, with a revival in the domestic tractor market last fiscal, the Rs 700 crore tractor division of Escorts saw its retail sales grow by upwards of 25 per cent. Incidentally, the retail sales were higher than the wholesale. "Our growth would have been higher, but we faced production constraints last fiscal due to one of our key vendors going on strike. However, we expect the industry to do well this year. It should grow by about 10 per cent in the current fiscal," Mr Chopra said.

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