Escorts Tractors Come Under the Kubota Wing
Fresh from posting an increase of 27% in its overseas revenue for 2021, Kubota is, according to reports published in India, to use some of that income to accelerate its involvement with Escorts.
While this may not appear to be of immediate interest to farmers here in Europe, it does suggest that Indıan companies are now being taken seriously by western manufacturers.
Increased stake in Escorts
In November of last year Kubota took a 9% stake in Escorts and this investment, it appears, is to be extended to 50% by the end of March.
What was not so widely reported at the time was the intention of the two companies to integrate their operations in India and build upon each other’s expertise.
The statement from Escorts in November noted that:
“This transaction shall pave the way for Escorts and Kubota to seamlessly integrate their respective strengths to become a formidable global force in the farm equipment sector.”
While there is often a degree of hyperbole attached to company announcements of this type, the underlying message is that Kubota is intending to capitalise on this investment by enlarging both its presence in the market and its manufacturing base.
Spreading its base
On the surface this does not appear to be a consolidation of manufacturing resources of the type that we see in Europe and America.
Kubota does not play that game, for it already has plants in America producing smaller tractors and engines – work that could be shipped back home or out to its Chinese factory if the company so desired.
Instead, the company has stated that its focus will be on growing its presence in the worldwide agricultural machinery market, not just grabbing a slice of the Indian trade.
Reinforcement of strengths
Just how much notice western manufacturers need take of this development is a difficult question to answer without being in possession of a crystal ball.
However, it can be noted that Kubota has huge resources and ambition while Escorts has a “frugal engineering and manufacturing capability” – to quote its chairman, Nikhil Nanda
Those tractors may be small and the implements may lack the sophistication that we have come to expect but there is a familiarity with their construction, and that is a healthy seed from which to grow.
In-house expertise
We might also include Kverneland in the mix, a western implement manufacturer with the skills and experience to take the Escorts machinery range to a higher level – or even have its products built in India.
Yet it is unlikely that the more familiar corporations need worry just yet. Nikhil Nanda suggests that the proposed R&D centre to be built as a joint venture will be looking at how to improve agriculture in emerging markets.
Overall, there appears to be a great amount of synergy in the deal, but it will take careful management and a long-term strategy – and that is a specialty of Japanese companies.
Source: Agriland
