Kubota Corporation, an agricultural machinery company from Japan and Escorts Limited (EL), an Indian tractor manufacturer have reached an agreement under which Kubota will increase its shareholding in India
According to Kubota, EL is a listed company that serves as a major tractor manufacturer in the Indian market, which is reportedly the world’s largest tractor market in terms of unit sales. EL also manufactures and distributes construction machinery as well as other products.
Kubota said that in India, tractors are utilised year-round for carrying loads, in addition to usual agricultural work, thereby mainstream tractors are highly durable with limited functions and at reasonable prices. With the aim of addressing market needs in India, Kubota has strengthened its partnership with EL, specialised in developing and manufacturing basic tractors, by establishing a joint venture manufacturing company in 2019 and through a direct equity investment into EL in 2020.
Kubota also said that it decided to increase its shareholding in EL, based on expectations for the basic tractor market to expand in emerging countries including India. In addition, it also said the management has also considered such investments are the best way forward for the company to utilise combined resources in an effective manner and further strengthen the partnership between the two companies.
After increasing its shareholding in EL, Kubota will look to provide affordable basic tractors, by utilising EL’s knowledge and Kubota’s accumulated product development knowledge and capabilities to improve quality and productivity in the R&D, procurement and manufacturing functions.
For distribution and service, Kubota will look to effectively utilise both companies’ networks by offering a wide range of products offerings, ranging from high-performance tractors to basic tractors. By positioning EL as an important foundation for basic tractors in the future, Kubota said that it will consider developing and manufacturing basic combine harvesters and construction machinery targeting India and other South Asian emerging markets.