Escorts sets up Rs 25 Crores facility in Uttaranchal for manufacture of Auto Components & Railway Equipment

Escorts Ltd has announced that the Company is setting up a manufacturing facility, with an investment of Rs 25 crores, at Integrated Industrial Estate, Pantnagar, Uttaranchal. It will manufacture auto components and railway equipment and add to its existing product portfolio.

The existing product offerings of the Company in auto components include Shock Absorbers, Telescopic Front Forks and McPherson Struts. In railway equipment it is mainly into the manufacture of Shock Absorbers for Rolling Stock, Couplers for Sub-urban and Mainline EMU trains, Braking Systems and Composite Brake Blocks. These are currently being manufactured in the facilities of the company in Faridabad, Haryana.

Mr. Nikhil Nanda, Executive Director - of the Company, said, "Considering the ample scope for volume growth in both the sectors, we have been aiming to further leverage our manufacturing strengths. As part of our growth strategy, we would like to have a much greater contribution from these segments in our operations."

In the auto component sector the Company has planned to significantly widen its product portfolio. It is also actively considering new partners and new export markets for auto components. In railway equipment, the company is foraying into the manufacture of a range of new products for emerging segments like Metros and New Technology Rolling Stocks.

The Indian auto component industry of nearly US$ 10 billion is witnessing a tremendous growth and is expected to touch US$ 40 billion by the year 2014 at a CAGR of 17%. The Company, which today stand at nearly US$ 2 billion are expected to grow at a CAGR of 34% and reach US$ 25 billion by the year 2014. On the domestic scenario, the automotive boom has in turn propelled the demand for auto components for OEMs. A fast growing after sales market for auto components has come up, which is expected to be a major driver in the coming years. Simultaneously, multinational OEMs and Tier 1 manufacturers are increasingly viewing India as their sourcing base.

The railway equipment sector is also looking up. Indian Railways is now in the process of major technological up-gradations with the largest ever Plan outlay at Rs 23,475 cr. for 2006-07. Wagon manufacture has been planned to increase by about 25%. In addition to its own manufacturing of rolling stock and heavy engineering components, Indian Railways also procures several components from domestic manufacturers who have strict and proven standards of design, development, testing and validation.

With a project cost of Rs 25 crore, at the new manufacturing facility in Pantnagar the Company will be availing several incentives like:

- Zero Excise duty instead of 16.32% for 10 years i.e. upto March 2017

- Central Sales Tax at 1% instead of 4%

- Income Tax holiday - 100% for 1st five years
-30% for next five years

- Uninterrupted power supply and Power tariff of Rs 2.50 per unit

Source : Equity Bulls

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