Escorts Eyes Rs 500 Crore From 6 Selloffs

Escorts Ltd, the flagship firm of the Rajan Nanda-promoted Escorts group, will raise close to Rs 450-500 crore during the next 7-8 months through divestment of six non-core businesses.

"This will not only help us wipe out debt, but also reduce interest costs to the tune of Rs 40-50 crore," Rajan Nanda said. "Consequently, we are hoping to record a substantial growth in bottomline from the next fiscal. But as for 2001-02, we will only manage to break-even."

Nanda says Escorts has been able to implement our investment schedule, which included consolidating the cellular telephony, healthcare and tractors businesses, in the past year. "But the divestment could not be completed due to the September 11 attacks on the US and the continuing slowdown in the American and European markets. The buyers, who are mainly from these countries, have held back their plans," Nanda said.

"We had planned to complete the divestment during the financial year 2001-02 as part of an old debt-retirement schedule. But since the recession occurred concurrently with the schedule, we had to roll over the debt and debit our books with more interest than we had anticipated," Nanda said.

Currently, the company is focusing on three core lines: agri business, healthcare and cellular telephony.

Nanda said, "The cellular business grew by 45-50 per cent during the financial year 2001-02, while the healthcare business has also grown very well. But the tractor division registered a decline in both turnover as well as bottomline because of higher capital engagement in competitive pressure."

Nanda said corrective measures would be implemented from April 1, and the tractor division alone would make a profit of Rs 120-140 crore in 2002-03. The cellular business, which will attain cash break-even in the current fiscal, will register a quantum growth in the bottomline next year.