Escorts amps CAPEX to $51Mn for FY23; expects high e-tractors exports

Escorts Ltd., an Indian engineering company that operates in the sectors of agricultural machinery, construction machinery, and railway equipment, has reportedly arranged CAPEX of around Rs 400 crore (USD 51 Million) for the current financial year in view of unveiling new products and building novel production unit.

When asked about the company’s investment plan, Bharat Madan, CFO of Escorts Ltd Group, said that the initial estimate will be between Rs 350 crore (USD 45 Million) to Rs 400 crore (USD 51 Million) for FY23, especially in both manufacturing as well as on the product side.

According to Madan, this will be done for building the production volume for new products which are expected to launch by the firm, but it does not possess the dimensions in the current lines. The firm, which has begun transporting electric tractors to the US and Europe markets, expects to contribute up to 15% of its complete overseas shipments in the coming five to six years.

However, he pointed out that Escorts is undertaking mid-term business plan, which is anticipated to begin during September-October. Following this, the firm will be having a clear picture of the industrial path in the future and how the investments will be directed in the next two years.

He further added that as the local volume and export go up, the firm also needs to expand the vendors’ capacities. It requires some financing in the tooling, etc., which is also a part of the CAPEX program.

Overall, the firm currently has a yearly production capacity of around 170,000 units at a group level, and that suffices the need to take care for the next two to three years, he stated.

It is vital to note that apart from building the capacity line for the new products, the CAPEX will also be covering vendor capacity expansion, which the firm is doing with its suppliers, where their volume for the existing component is restricted.

Source Credit - https://www.moneycontrol.com/news/business/companies/escorts-lines-up-rs-400-crore-capex-for-fy23-eyes-higher-exports-of-electric-tractors-8508801.html