Just about a week is left for Escorts' merger plan of its subsidiaries to come through. However, the Group is already busy shoring up its engineering capabilities by acquiring new technology from overseas.
In March, it entered into a tie-up with Italian cranemaker Locatelli. With this, it will widen its construction equipment portfolio by locally manufacturing large skew (360 degree rotation) cranes of 60-80 tonnes capacity.
Production of the cranes, which are used in material handling for large infrastructure projects such as power plants, metro and bridges, is likely to begin in a year and half.
“This is the genesis of the merger that we're doing. By combining the group entities, we see a lot of efficiency in the combined research and sourcing. We're look at ourselves as an engineering company in the medium to long-term perspective,” said Mr Nikhil Nanda, Joint Managing Director.
The Faridabad-based Group hopes to get a court approval on April 20 for the merger of Escorts Construction Equipment, Escotrac Finance and Investments and Escorts Finance Investment and Leasing, into Group flagship Escorts Ltd. This move is expected to add over Rs 1,000 crore into its Rs 3,200 crore topline.
With demand from the construction equipment business on a high, the company is now searching for about 35 acres for capacity expansion over the next two years. “With the Ballabhgarh plant operating at 100 per cent, we need to take up more land on a lease basis. This will happen very soon,” Mr Nanda said.
The Locatelli tie-up is just the first of multiple such technical collaborations currently in the works across the construction and farm equipment businesses. For the first vertical, at least 15 new products are planned in the next 18 months for areas such as mine equipment and asphalt handling.
Jumping the R&D ladder by acquiring new technology is not new to the Group though.
Early support for tractors came from Ford, while Yamaha used to be a partner for an erstwhile motorcycle range it produced.
More mainstream products, such as trucks and dumpers, have also been thought about.
“There is a lot of technology coming cheap from the East European corridor. We had done a study, but are not going there right now,” another company official said.
Escorts shares on the BSE were up 1.51 per cent to Rs 67.35 on Tuesday.