Escorts has lined up a Rs 400 crore capex for FY23; Electrical exports higher eyes

The company, which has begun exporting electric tractors to markets such as the United States and Europe, expects to contribute up to 15 percent of its total foreign shipments over the next five to six years.

“At the moment, Capex, our initial estimate will be around Rs 350-400 crore (for FY23), mainly in both manufacturing as well as product,” asked CFO Bharat Madan PTI of Escorts Limited Group, the company’s investment plans for 2022-23.

He said it would be to create the production capacity of new products that the company is introducing for which there is no capacity in the existing line. “So, we need capacity for that,” Madan said.

“At the moment, however, we are in the process of formulating this medium-term business plan, which is expected to be ready by September-October. After that, we will have more clarity (on the industry roadmap) and how the investment will be made in the next two years. ”

In addition to creating power lines for new products, Capex will also cover vendor capacity expansion, which the company is doing with its suppliers, where their capacity is limited to existing components.

“As domestic volume increases and exports increase, we also need to increase the capacity of vendors. We need some investment in tooling, etc., which is part of the CAPEX program, ”added Madan.

Overall, he said, the company currently has an annual production capacity of up to 1.7 million units at a group stage and that is enough to take care “for the next two to three years”.

Regarding the export of electric tractors, Madan said, “We are exporting now. It has a very good demand. We are exporting now. It’s also a focal point for Kubota (the new promoter of escorts) and they’re keen to invest in that segment. “

Regarding the possibility of exporting electric tractors, he said, “Our total export is now only 6,000 to 8,000 tractors. We are probably looking at exporting 30,000 to 40,000 tractors in the next five to six years. We notice that there should be a large share of electricity in it and at least 10 to 15 percent of our numbers are coming from electric tractors. “

Madan said some electric tractors have also been exported to Cuba for testing and are now in good demand from the United States, which is in large order and in the process of being implemented.

Currently, he says, the only limitation is on batteries because all batteries are coming from China.

“We are trying to localize those lithium-ion batteries. Localization will lead to cost savings and constraints will be addressed. This is a process that is going on now and may take months. Once that is done, India’s capacity should be sorted out. I can see the volume, ”he added.

The company wants to outsource to third party suppliers for batteries in India. Regarding the introduction of electric tractors in India, he said, “The cost for the domestic market is very high. So, I don’t think farmers are ready.

There is no infrastructure, and secondly, costs are still prohibited. “

“Once localization takes place, it will reduce costs and empower the company to launch in the domestic market,” said Madan.

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