The Hindu Business Line : Escorts talking to PE firms to raise funds

Escorts Ltd is currently in talks with a clutch of private equity firms to raise money to fund expansion of its construction equipment unit. The company plans to set up two new facilities for construction equipment, one of which will be in Ballabgarh (Haryana) and the other at Rudrapur (Uttaranchal), Mr Nikhil Nanda, Executive Director and COO, Escorts Ltd, told Business Line.

The company currently manufactures construction equipment at its Faridabad facility.

Mr Nanda, however, declined to disclose how much money the company was looking to raise, adding that the deal would be finalised in early 2007.

With the expansion, Escorts would double the capacity of its construction equipment. The company's construction equipment unit makes products such as pick and carry cranes and fork lifts.

The company is also in the process of enhancing capacity at its tractor facilities to 98,000 units from 76,000 units by reaching a settlement with its labour union. "Under the settlement, the productivity at these units would increase by about 30 per cent", Mr Nanda said.

Sales of Escorts' tractors have cruised in top gear this year, driven by both domestic demand and export sales.

Sales grow

In the period to September this year, Escorts domestic tractor sales saw an increase of 96 per cent, while the market grew by about 23-24 per cent. Similarly, tractor exports increased by 82 per cent while tractor exports from the country increased by 16 per cent, Mr Nanda said.

Mr Nanda added that the company would focus on its construction equipment, tractors, railway parts and auto components businesses as part of its ongoing restructuring. He added that the company has already reduced its debt burden to Rs 590 crore from Rs 1,100 crore three years back, and was in discussions with banks in order to make the company's financial position stronger.

As part of its restructuring exercise,

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