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On A Farm Footing
Photo Credit :
Escorts, India’s third largest tractor manufacturer, registered a compound annual growth rate (CAGR) of 23.3 per cent between October 2008 and September 2013. It posted a net profit of Rs 245 crore for the 18-month period ended March 2014 (the company extended its financial year to align with the April-March fiscal calendar). Asked about the good run, Nikhil Nanda, managing director, Escorts, says, “We have brought down our raw material costs substantially and are expanding our business to other countries.”
Plus, Escorts sells tractors at the higher end (Rs 3-6 lakh) of the price spectrum, catering to a niche market. The company also sells Ferrari tractors, which are priced at Rs 8 lakh for a 50 horse power model. It now plans to produce Ferrari tractors in India and thus reduce production costs. “So far, we were making them in Italy and selling them in India. Now, we plan to bring production to India,” says Nanda. He uses the analogy of Mercedes to describe the brand positioning of two of his tractor brands (Farmtrac and Powertrac) in the market. “We do not just sell tractors. We sell an experience,” says Nanda.
Escorts has seen its tractor volumes going up by 8.9 per cent to 100,833 units in FY2014, as compared to 92,543 in March 2013. The company is heavily focused on technology and has quadrupled its expenditure on R&D to Rs 83 crore as of September 2013, from Rs 22 crore in the same period of 2010.
But Nanda aims to move beyond tractors, and turn his business into a farm solutions company. “In future, we would want our tractor business to be just a part of the services and products we offer to farmers.”
The company already manufactures equipment for the railways, auto and construction sectors. The volume of construction equipment for the 18 months ended March 2014 was at 4,789 units. Escorts Railway Products, a division of the group, posted a revenue of Rs 255.8 crore for FY2014 (18 months) as against Rs 222 crore in the 18 months ended March 2013.
(This story was published in BW | Businessworld Issue Dated 11-08-2014)
Plus, Escorts sells tractors at the higher end (Rs 3-6 lakh) of the price spectrum, catering to a niche market. The company also sells Ferrari tractors, which are priced at Rs 8 lakh for a 50 horse power model. It now plans to produce Ferrari tractors in India and thus reduce production costs. “So far, we were making them in Italy and selling them in India. Now, we plan to bring production to India,” says Nanda. He uses the analogy of Mercedes to describe the brand positioning of two of his tractor brands (Farmtrac and Powertrac) in the market. “We do not just sell tractors. We sell an experience,” says Nanda.
Escorts has seen its tractor volumes going up by 8.9 per cent to 100,833 units in FY2014, as compared to 92,543 in March 2013. The company is heavily focused on technology and has quadrupled its expenditure on R&D to Rs 83 crore as of September 2013, from Rs 22 crore in the same period of 2010.
But Nanda aims to move beyond tractors, and turn his business into a farm solutions company. “In future, we would want our tractor business to be just a part of the services and products we offer to farmers.”
The company already manufactures equipment for the railways, auto and construction sectors. The volume of construction equipment for the 18 months ended March 2014 was at 4,789 units. Escorts Railway Products, a division of the group, posted a revenue of Rs 255.8 crore for FY2014 (18 months) as against Rs 222 crore in the 18 months ended March 2013.
(This story was published in BW | Businessworld Issue Dated 11-08-2014)