MARKETING STRATEGY-NOW ACQUISITIONS IN CHINA, AFRICA AND EUROPE BY AN INDIAN COMPANY
Escorts are making a planned move back into the tractor market. Having washed its hands off non-core businesses like IT, telecom and healthcare, Escorts has now penned a new resurrection strategy for its mainstream tractor business, which includes acquiring tractor makers in China and Europe.
Plans are also afoot to set up tractor assembly bases in Africa and West Asia in addition to its existing tractor units in the US and Europe (Poland). The overseas forays, in fact will play a big role in Escortsâ€™ second coming in the tractor market as the company expects global markets to account for 25-30% of its total sales in the next two years.
Escorts have already appointed a merchant banker to finalize the acquisition target in China. Escorts have short listed two Chinese companies and negotiations are underway to buy a controlling stake (over 51%) in one of these firms.
The deal is expected to be closed in this year that is 2006 said an Escorts executive director. In the past 15 months, the company has worked towards retiring costly debts and turning around the company.
Escorts now have posted a small profit in the past quarter and are studying acquisitions in Europe.
The firm is raising additional resources for funding the overseas forays through sale of other non-strategic joint ventures. In addition they plan diluting 25% of their holding in Escorts Construction Equipments through a private placement to a financial investor. All these put together will help them raise the required capital for new acquisitions.
Escorts directors with all their moves in augmenting their financial structure they are now in a comfortable position to expand the tractor business, in India and abroad.
The firm has also got the regulatory clearances for establishing base in Africa. Ghana has invited them to set up an assembly base and start selling tractors in the eight African nations under Economic Community of West African States (ECWAS), Besides , talks are on to set up a base in Turkey to address the West Asian markets.
The interesting thing here to observe is the revamping of the whole business and going back to the core concepts. The strategy is three pronged to enter new potential markets and increase revenues to make a turnaround,
Â· Identifying markets for Tractors
Â· Going back to Core strengths
Â· Hiving off non-rewarding resources and generate capital out of these.