NEW DELHI: The Escorts Group is looking at acquisitions with an eye to more than triple its revenue from railway equipment division to Rs 1,000 crore in the next five years. The company has adopted a four-pronged strategy to expand its business, Dipankar Ghosh, chief executive of Escorts Railway Equipment Division told ET.
“Apart from building a strong R&D team, collaborating with global technology majors, value engineering products and improving margins, we are exploring targeted acquisitions in megatronics, high-end propulsion systems,” Ghosh said.
“Whatever acquisitions we make will be complementary to our existing business. Talks are at an advanced stage and a deal is expected to be closed by March 2018.” The company has earmarked Rs 200-300 crore for investments in its railway equipment division over two years. “The investments can go up depending on the requirement and provided we see value in the opportunity,” Ghosh said.
In all, the Escorts Group is targeting an increase in revenue from the railway equipment division to Rs 1,000 crore by 2022 from Rs 300 crore it estimates to earn in the current financial year. It had earned revenue of about Rs 170 crore in 2013-14.
The Faridabad-based engineering conglomerate has business interests in agricultural machinery, construction equipment, auto components and rail equipment. Given the government’s focus on safety and sizeable investments it is planning to make for upgrading railway infrastructure, the group expects its railway equipment business to grow at a minimum compound annual growth rate of 25% over the next four-five years. Indian Railways is looking at modernising its infrastructure in the wake of a spate of accidents. “We see huge potential in the modernisation drive of the Indian Railways.
We want to make railway components locally and substitute imports through frugal and value-engineered products,” Ghosh said. To this end, Escorts is expanding its product portfolio to supply more components to the Indian Railways. Apart from braking, coupling and suspension systems, the company is developing airconditioning and traction modules for railways.
Besides, it is looking at supplying locally manufactured value-engineered products at competitive prices to companies in Malaysia, Vietnam and Myanmar. It has also started shipping products to some upcoming markets in Africa.