Escorts Announces 45% Dividend

Escorts Ltd announced an increased dividend of 45 per cent for the financial year ending March 31, 1997 - up from 40 per cent in the previous year. This involves an outflow of Rs 27.77 crore to the shareholders, against Rs 22.96 crore in 1995-96. Income of Escorts Ltd increased to Rs 1,657 crore, from Rs 1,444 crore last year, and profits rose to Rs 167 crore from Rs 139 crore in the last fiscal.

Even though Escorts divested its profit making piston and Rajdoot businesses during the financial year to form new joint venture companies, the healthy growth witnessed is attributable to the expansion of the core business of tractors and harvestors, said Rajan Nanda, chairman of the group. Earnings per share have risen to Rs 19.52, the book value to Rs 122 per share, and the ratio of reserves to equity was at 11 times the capital base, a company release said. The financial results from 1993-94 have amply justified the restructuring programme undertaken by the company, said Nanda. He added that the 10 per cent return on sales was well above the prevailing trend in the engineering industry as a whole.

The core business of harvestors and tractors has fared well in both the domestic and export markets. To meet the projected demand in the next three-four years, Escorts is building a Rs 175 crore new generation manufacturing plant near Pune.

The Pune plant, which will increase the combined tractor production capacity of Escorts to 80,000 annually, will be financed through internal resources, the company release said. Nanda said the company expected substantial dividends on its investments in the divested businesses and the new cellular telephone joint venture.