According to a senior company official, the money will be spent on launching new products and building production capacity.
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. Bharat Madan, CFO, Escorts told PTI,
“At the moment Capex, our initial estimate is around Rs. The company is introducing new products for which it does not have the capacity in the existing line. “So, we need capacity for that.”
“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 industrial roadmap and how investments will happen in the next two years. Madan added.
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.
Currently, the company has an annual production capacity of up to 1.7 million units at a group stage and this is enough to take care of 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, with large orders 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 a third party supplier for batteries in India.
Regarding the introduction of electric tractors in India, he said, “cCost is very high for the domestic market. 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.