Escorts Kubota Limited — Others, 20-06-2025: Shareholders meeting

Escorts Kubota Limited has completed the merger of its erstwhile joint ventures, Escorts Kubota India Private Limited and Kubota Agricultural Machinery India Private Limited, effective April 1, 2023, as approved by the NCLT. This consolidation under 'One EKL' streamlines operations and unlocks synergies in product development and market access. The Company has classified its Railway Equipment Division (RED) as discontinued operations following its approved slump sale to Sona BLW Precision Forgings Limited for ₹1,600 crore, subject to closing conditions.

For the fiscal year 2024-25, standalone revenue rose 4.7% to ₹10,187 Cr, while consolidated revenue reached ₹10,244 Cr, a 4.2% increase. Net profit including discontinued operations grew by 15.7% standalone to ₹1,251 Cr and 17.5% consolidated to ₹1,265 Cr. The Board has declared an interim dividend of ₹10 per share and recommends a final dividend of ₹18 per share, aggregating to a 280% payout.

Operational highlights include steady tractor sales growth of 1% to 115,554 units and a construction equipment volume decline of 9.2% to 6,484 units amid transition to Stage V emission norms and market challenges. Non-tractor revenues now contribute about 20% to the agri machinery segment, reflecting robust growth in agri solutions, engines, and service & spare parts.

R&D expenditure rose to ₹194.6 Cr (1.91% of turnover), focusing on product innovation and emissions compliance. The Company continues to enhance manufacturing via automation and capacity expansion, including plans for a greenfield facility in Uttar Pradesh with an estimated investment of over ₹4,500 Cr.

Escorts Kubota’s capex for FY 2025-26 is targeted between ₹350-400 Cr, primarily for new product development and manufacturing improvements. The Company maintains a net-debt-free balance sheet post loan repayments, and CRISIL has reaffirmed its credit ratings at AA+/A1+ with stable outlook.

On ESG, EKL committed to carbon neutrality by 2050, with a 25% reduction in Scope 1 and 2 emissions by 2030, water positivity, and zero landfill waste by 2027. Renewable energy use is being tripled from FY 2022-23 levels. Gender diversity targets have been met with over 7.9% women representation, aiming for 9% in FY 2025-26. EKL spends over ₹11.7 Cr on CSR annually, focusing on agricultural empowerment, community development, and women’s skill-building programs.

Governance is robust with an 18-member diverse Board, including independent and promoter directors. Key management continuity is maintained with re-appointments of directors Bharat Madan and Nitasha Nanda. The Company follows stringent compliance measures, with no material audit qualifications. Corporate governance and internal controls are deemed adequate and effective.

Escorts Kubota Finance Limited, a wholly-owned NBFC subsidiary, commenced operations in November 2024 to provide captive financing aligned with product sales. The Company’s extensive dealer network exceeds 1,600 outlets, supporting over 2.5 million customers globally. Export revenue accounts for roughly 5% of total turnover, with a focus on leveraging Kubota’s worldwide distribution.

In summary, Escorts Kubota Limited is strategically positioned for sustainable growth in agriculture and construction equipment sectors, supported by integration benefits, strong financial performance, ESG initiatives, and a focus on innovation and market expansion that benefits shareholders and other stakeholders.