Farm and construction equipment firm Escorts Kubota Ltd on Wednesday said it will sell its railway equipment business division to Sona BLW Precision Forgings Ltd for Rs 1,600 crore. The company has entered into a business transfer agreement with Sona BLW Precision Forgings Ltd (Sona Comstar) for transferring the railway equipment business division (RED) as a going concern, on slump-sale basis, Escorts Kubota Ltd (EKL) said in a regulatory filing.
The transaction is being carried out for a lump sum cash consideration of Rs 1,600 crore subject to the terms of the agreement, it added.
On the rationale behind the sale, EKL said it has decided to divest the RED in line with its strategic focus on agri and construction equipment sectors.
“This strategic shift is aimed at simplifying operations, capital reallocation leading to an increase in scale and efficiency of the core businesses. the vision of the parent i.e. Kubota Corporation, EKL is positioning itself for sustainable growth and driving innovation in its core businesses,” the company said.
EKL Chairman and MD, Nikhil Nanda said, “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 one of the railway component suppliers in India for products like brakes, couplers, suspension systems, and friction and rubber products. It also has a few new products in the pipeline, which includes HVAC systems, electrical control panels, vacuum evacuation systems, and automatic plug doors, the company said.
The acquisition of RED aligns with the vision of Sona Comstar as they intend to expand into the broader mobility sector, and it will enhance their clean mobility product offerings by adding railway components business, it added.
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