Escorts to cut frills to turn more lean, profitable
Since tractors under the agri-machinery business make 75% of the top-line at Escorts and construction equipment the remaining, the group aims to enhance its profitability from these segments with a focused approach towards premium products.
During the December quarter, the company sold 17,106 tractors, an increase of 32% sequentially. Total Escorts agri-machinery sales stood at R845.7 crore in the December quarter, on revenues of R1,028.2 crore. “We want Escorts to be the most profitable tractor company in the next two years and to achieve that, we are undertaking a slew of initiatives, from cost cuts to improved premium and high technology products,” said Nanda. “We want to make good profits with good margins,” he said.
Except for the agri-machinery business where Escorts posted 9.4% growth in Ebitda margins in the December quarter, the other businesses saw negative Ebitda margins.
Premium tractors in the range of 50 to 80 horse power (hp) would be the company’s focus, with the export market in mind. In the construction equipment segment too, the company plans to upgrade its range with better technology and offerings.
Escorts sells tractors (25 to 80 hp) under its premium brand — Powertrac and mass brands — Farmtrac and Escort. The company said it will be launching a new product under a global brand in the premium tractor segment by the end of this month.
“Low crop yield, rising cost of labour and shortage of farm
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