Escorts Kubota Ltd declared that it will hand over its railway equipment business segment to Sona BLW Precision Forgings Ltd for Rs 1,600 crore. Escorts Kubota Ltd (EKL) unveiled in regulatory compliance that they have stepped into a business transfer contract with Sona BLW Precision Forgings Ltd (Sona Comstar) for the handover of the railway equipment business division (RED) as an ongoing concern, under a slump-sale plan.
According to the terms of the contract, it was specified that the contract would be settled for a sum of Rs 1,600 crore in cash. EKL stated that the choice to sell RED was made to coincide with its strategic focus on the agricultural and construction equipment sectors.
The company mentioned, "This strategic shift is aimed at simplifying operations, capital reallocation leading to an increase in scale and efficiency of the core businesses. By aligning with the vision of the parent i.e. Kubota Corporation, EKL is positioning itself for sustainable growth and driving innovation in its core businesses."
"With a renewed focus on core business divisions, EKL aims to maximize value for stakeholders and solidify its position as a leading player in the agri and construction equipment industry," Nikhil Nanda, Chairman and MD of EKL stated.
The company RED is one of the suppliers of railway parts in India, offering products like brakes, couplers, suspension systems, and friction and rubber items. The company also announced several upcoming products, such as HVAC systems, vacuum evacuation systems, electrical control panels, and automatic plug doors.
Acquiring RED is in line with Sona Comstar's vision as they aim to enter the wider mobility industry, and it will improve their clean mobility product range by including the railway part business, the statement included.
