escorts: “Kubota aims to meet global markets from India”

Japan’s largest tractor maker, Kubota Corporation, which plans to invest Rs 9,400 crore in Japan, expects India to contribute $ 3 billion to its sales over the next decade, as he intends to use the base to expand into India as well as other emerging markets.
Yuichi kitao, the President and Representative Director of Kubota Corporation said
Ketan Thakkar & Satish John together with Escorts, Kubota intends to more than double its market share to 25% by 2025. Escorts – its biggest investment to date – will help Kubota expand its product line in tractors and machinery agriculture and will help meet the needs of India, Southeast Asia, Africa and Latin America, he said. Edited excerpts:

What is the idea behind investing in escorts?

Current players in emerging markets – India and China – are trying to find their way into existing markets in Europe, North America and Asian countries with their low-cost products. We must therefore renounce their attempts to get ahead of us by providing them with superior quality products. Considering the scale of the Indian agricultural machinery market and its potential for future growth, we have decided to invest in Escorts. We will make optimal use of both brands and cover the entire agricultural machinery market from high end to low end and thus we are committed to contributing to India.

The total size of the investment is around Rs 9,400 crore. Since our first negotiation in 2016, we have invested another 10% in Escorts directly. Based on the trust in the relationship, Kubota decided to increase its stake in Escorts this time, with a view to further expansion of the market for value-for-money tractors, mainly in India and emerging countries. Kubota aims to capitalize on the strengths of both companies and respond to global markets from India.

Is the stake percentage important? How would you develop the business with Escorts?

In this new journey between Escorts and Kubota, we are equal common partners even though we control the business for the future. I can count on Nikhil Nanda San (title of respect in Japanese) to make Kubota and Escorts bigger players in the new journey. Escorts has the ability to manufacture low cost, quality and everything products in India. Kubota also has the talent and ability to manufacture high quality and advanced products, technologies. So, the two have different types of abilities and talents; now we’re going to combine that. We will adopt new ways of approaching the future agricultural machinery market. We expect a lot of synergies.

What are your growth expectations for the Indian market?

Our estimate is that the Indian tractor market will reach 1.2 or 1.3 million units out of around eight lakh currently. Many countries are demanding low cost, rugged tractors in emerging markets, which will bring additional volumes of over 1.4 lakh (for Kubota) within 10 years. In terms of units, India will become the biggest market for Kubota in the future.

Can you share your short term vision for India in the next 3-5 years?

Escorts will be positioned as a good value machine in India and around the world. We are therefore looking at a combined market share target of 25% by 2025. By then, Escorts will increase its volumes by 30-40% and Kubota’s volumes in India will quadruple.

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