Escorts net dips 32, retains 45 dividend

It said the fall in sales and profit was due to a labour strike for 70 days which resulted in production loss. In 1998-99, tractors sold by the company declined by seven per cent to 45,010 from 48,330 units in the previous year. The company had a market share of 17.7 per cent of total tractor market during the year.

Escorts Ltd chairman Rajan Nanda said the company had a promising start in the current fiscal with a market share of 20.5 per cent against 15.1 per cent during the same period last year. In the first two months of the current fiscal, the company sold 8,493tractors as against 5,930 during the corresponding period last year, a growth of 43 per cent.

Escorts has negotiated a long-term settlement with workmen. The agreement encompasses new industrial engineering norms and productivity levels commensurate with machine output standards and working hours.

This settlement is an instrument for cultural transformation and will afford the company greater operational flexibility in resource utilisation and higher productivity, it said. The company has fully protected its long-term business expansion plans, investing Rs 90 crore in modernising its agri machinery plants and Rs 105 crore in the share capital of group companies without any significant recourse to borrowing. Out of all the group companies the single largest investment was made in cellular services subsidiary Escotel.

Nanda said after three difficult years, the business outlook confirms that our vision, business selection and large investments made by us would enlarge the growth prospects of the company.All business have completed financial closure for their respective product programme and have a very optimistic growth for the mid-term, he said.

In an effort to improve its bottomline in the current fiscal, Escorts Ltd has planned to repay Rs 200 crore of debt without recourse to any new borrowings.

As part of its debt repayment plan, the debt equity ratio of the company will be reduced to 0.3:1. Escorts, which reported a drop of 32 per cent in net profit to Rs 110.17 crore in 1998-99, said the company8217;s balance sheet would be a totally transformed one in the current fiscal and will become a star balance sheet.

In a statement it said the operating profit to sales ratio would experience very healthy growth and the guarantees given for loans by associate and subsidiary companies would be reduced by more than 50 per cent.

The company, in the current fiscal, was also giving more thrust to export by entering into two alliances 8212; with Carraro Spa of Italy and Long Agribusiness Lcc of the USA. With CarraroSpa the company would produce latest generation axles and transmissions at Pune with 50 per cent of the output to be exported to Europe.