Kubota investment in Farmtrac

Japanese machinery manufacturer Kubota has announced an investment in the Indian company behind the Farmtrac tractor range. With this arrangement with Escorts, Kubota aims to increase its presence in India – the world’s largest tractor market.

This is part of a wider, on-going collaboration between Kubota and Escorts. In February 2019, the two companies established a joint-venture tractor manufacturing company, with mass production due to start this July. The result of that co-operation will be a tractor that looks like the one pictured.

“Through this capital tie, the two companies intend to deepen their co-operative relationship further and, by leveraging each other’s strengths, create synergy across a broad range of their business,” Kubota said in a statement.

The Japanese company is also hoping to expand its global reach by tapping into Escorts’ parts procurement network and capability to reduce cost. The investment comes at a time when Escorts’ Farmtrac make is gaining ground in international markets, including parts of Europe.

Escorts will issue new equity shares to Kubota on a preferential allotment basis (subject to shareholders’ and necessary regulatory approvals). Kubota will then hold 9.1% of the Indian company’s share capital, which will move to 10% over time. The total amount of investment will be approximately 16 billion Japanese yen, or around €138 million.

After going through the necessary procedures and subject to receipt of approvals, the investment is likely to be completed by June 2020. Going forward, the Japanese company says it aims to establish a joint research and development centre with Escorts, to develop products that are ‘optimised for the local market and shortens the development period.’

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