The joint venture, which manufactures different types of backhoe loaders, kicked off operations in Faridabad nearly two decades ago. It began as a 60:40 alliance between Escorts and JCB but the Indian partner has now decided to cede control and settle for a 40 per cent stake. "The issue now is one of assuring the latest technology for the market along with new product lines. This is something which can be done only if JCB takes charge of operations," sources said. The construction equipment business of the alliance presently accounts for over 60 per cent market share.

The entire transaction is expected to be finalised during the course of this fortnight as all necessary approvals from the Foreign Investment Promotion Board have been received. Sources say that once this is done, JCB will go all out to bring some of its state-of-the art products to India. "The construction equipment business will soon be buzzing with activity and competition will be quite intense in the years to come," they add.

This is because there will be some big names in the world business like Komatsu and Hitachi of Japan, Case Corporation of the US and others who will have also got their act together by that time. Escorts is not the only player which has recognised the need for more advanced skills in this particular activity. As part of its own restructuring efforts, L&T has kicked off the exercise in right earnest with its construction equipment businesses at Bangalore and Pithampur. While it has decided to spin off the Bangalore unit as a 50:50 joint venture with Komatsu, talks are on with Case Corp to finalise the deal for the Pithampur facility.

This is expected to be done during the course of the current financial year and will again be a 50:50 venture between L&T and Case. As in the case of Escorts, the inflow from hiving off the construction equipment business would help L&T focus on its key operations which contribute to over 50 per cent of its turnover. The company also feels that it translates into a good deal for its shareholders. Escorts, sources say, will now be able to devote its energies on core activities that guarantee good revenue. These include the business of manufacturing two-wheelers, tractors, etc. Eventually, every corporate house will, no doubt, need to keep a diversified portfolio to stay afloat but at least two-thirds of these will have to be the money spinners, experts aver.