Japan’s largest tractor maker Kubota Corporation, which plans to invest Rs 9,400 crore in , expects India to contribute $3 billion to its top line in the coming decade as it intends to use the base to expand in India as well as other emerging markets. Yuichi Kitao, president and representative director of Kubota Corporation told
Ketan Thakkar & Satish John that along with Escorts, Kubota intends to more than double market share to 25% by 2025. Escorts — its biggest investment yet — will help Kubota expand its product line-up in both tractors and agri-machinery and help cater to India, Southeast Asia, Africa and Latin America, he said. Edited Excerpts:
What is the idea behind investing in Escorts?
The present players from emerging markets — India and China — are trying to pry their way into existing ones in Europe, North America and Asian countries with their low-cost products. So, we must hand off their attempts to get ahead of us by supplying superior products. Given the scale of the Indian agricultural machinery market and its future growth potential, we decided to invest in Escorts. We will put both the brands to make optimal use and cover the entire agricultural machinery market from high-end to low and thus commit ourselves to contribute to India.
The total size of the investment is around Rs 9,400 crore. From our first negotiation in 2016, we further invested 10% in Escorts directly. Based on the trust in the relationship, Kubota decided to increase the shareholding in Escorts this time, with a view to future expansion of the value-for-money tractor market, mainly in India and emerging countries. Kubota aims to capitalise on the strengths of both companies and to cater to global markets from India.
Does the stake percentage matter? How would you grow the business together with Escorts?
In this new journey between Escorts and Kubota, we are equal joint partners even as we control the company for the future. I can count on Nikhil Nanda San(title of respect in Japanese) to make Kubota and Escorts bigger players in the new journey. Escorts has the ability to make products, low-cost, quality and everything in India. Kubota also has talent and ability to make products, high-quality and advanced technologies. So, both have different types of ability and talent; now we will combine that. We’ll adopt new ways of approaching the future agricultural machinery market. We are expecting a lot of synergies.
What is your growth expectation from the Indian market?
Our estimation is that the Indian tractor market will grow into 1.2 or 1.3 million from around eight lakh units currently. Many countries are requesting for low-cost and sturdy tractors in emerging markets, which will bring in incremental volumes of over 1.4 lakh units (for Kubota) within 10 years. Unit-wise, India will become the biggest market for Kubota in the future.
Can you share your short-term vision for India in the next 3-5 years?
Escorts will be positioned as a value-for-money machinery in India and globally. So, we are looking at a combined market share target of 25% by 2025. By then, Escorts would grow its volumes by 30-40% and Kubota’s volumes in India will grow by four times.