New Delhi: Escorts Kubota Ltd, a farm and construction equipment provider, announced on Wednesday that it will sell its railway equipment business division to Sona BLW Precision Forgings Ltd for Rs 1,600 crore. Escorts Kubota Ltd (EKL) said in a regulatory filing that it has signed a business transfer agreement with Sona BLW Precision Forgings Ltd (Sona Comstar) to transfer the railway equipment business division (RED) as a continuing concern on a slump-sale basis. The deal is being carried out for a lump sum cash payment of Rs 1,600 crore, subject to the terms of the agreement, it stated.
Regarding the transaction, EKL stated that it decided to divest the RED in accordance with its strategy concentration on the agri and construction equipment sectors. "This strategic move aims to simplify operations and reallocate money, resulting in increased scale and efficiency of core companies. "EKL is positioning itself for long-term growth and driving innovation in its core businesses by aligning with the vision of its parent, Kubota Corporation," the company stated.
EKL Focuses on Core Business as Sona Comstar Expands into Railway Components
CEO of EKL, Nikhil Nanda stated, "with a renewed focus on core business divisions, EKL aims to maximise value for stakeholders and solidify its position as a leading player in the agri and construction equipment industry."
The company's RED is a railway component provider in India, offering equipment such as brakes, couplers, suspension systems, and friction and rubber materials. The company also plans to release a few new items, including HVAC systems, electrical control panels, vacuum evacuation systems, and automated plug doors. The acquisition of RED matches with Sona Comstar's objective of expanding into the broader mobility industry, and it will boost their clean mobility product offerings by adding railway components, according to the company.
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