Construction is expected to begin early next fiscal year, with the facility taking around two to two-and-a-half years to complete.
Highlights:
- New tractor manufacturing facility planned in Uttar Pradesh.
- Proposed plant will be located near Jewar airport.
- Initial annual production capacity will be 60,000 tractors.
- Capacity can subsequently expand to one lakh units.
- Construction equipment volumes grew 53% in the September quarter.
- Tractor demand could recover from July–September 2027 if the monsoon is normal.
New Delhi: Escorts Kubota plans to begin construction of a new tractor manufacturing facility in Uttar Pradesh early next fiscal year, strengthening its production capacity to tap future growth opportunities.
The proposed greenfield facility near Jewar airport will have an initial annual capacity of 60,000 tractors, which can subsequently be expanded to one lakh units.
In an interview with PTI, Escorts Kubota Chief Financial Officer Bharat Madan said the facility is expected to take around two to two-and-a-half years to complete after construction begins.
Existing Plants Operating Near Peak Capacity
The expansion comes as the company’s tractor business is operating at an average capacity utilisation of around 80–85%. During the high-season quarter, utilisation reaches nearly 90%.
The additional manufacturing capacity will give the company room to increase production as demand grows over the coming years.
Strong Growth Beyond Tractors
While tractor demand faces near-term challenges, Escorts Kubota has recorded strong growth across several other businesses.
Construction equipment volumes increased 53% during the September quarter, while the harvesters and transplanters business registered growth of 20–30%. The engine business also delivered double-digit growth during the year.
Madan highlighted the performance of the company’s parts and services operations as well, expressing confidence that businesses beyond tractors would continue to perform well.
The growth across these segments comes as the company prepares to expand its manufacturing footprint and address future opportunities in farm mechanisation and construction equipment.
Weather and Costs Weigh on Tractor Demand
The tractor business, however, has faced demand pressures arising from uneven monsoon conditions, the El Nino effect and elevated input costs.
According to Madan, water scarcity in paddy-growing states, including Telangana, Karnataka and Maharashtra, is affecting demand prospects. Jharkhand and Chhattisgarh are also expected to remain under pressure.
These conditions have created temporary challenges for tractor demand, even as the company continues planning additional production capacity.
When Could Recovery Begin?
Madan expects tractor demand to start recovering from the second quarter of the next fiscal year, corresponding to July–September 2027, provided the monsoon is normal.
He also expects the company’s financial performance to begin recovering from the fourth quarter, with margins likely to return to normal levels next year.
The proposed Uttar Pradesh facility forms part of Escorts Kubota’s preparations to meet future demand, while its construction equipment, engine and other farm mechanisation businesses continue to support growth.
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