A contrasting sight awaits visitors at the entrance of Escorts’ corporate office in Faridabad. A mini tractor stands next to a giant tractor. Nikhil Nanda, Escorts’ MD, and other key members of the management seem elated as they pose with the lineup for a photo-op. The smaller tractor (Farmtrac 26E) is the country’s first electric tractor, introduced last year and the giant (Farmtrac 6075 CRDI) is a recently-launched monster, aimed at the international market. It is a clear attempt to show how far the company has come since it first launched its tractors in 1954.
“Just 10 years ago, our company was in coma,” says Nanda, with a straight face. Being the oldest Indian tractor maker, Escorts’ pioneering effort ensured that it remained a strong contender, but challengers Tafe and Mahindra & Mahindra (M&M) raced ahead with the former gobbling up Eicher’s tractor business in 2005 and the latter acquiring Punjab Tractors in March 2007. When the Nanda scion moved into the top job, the company was beset with high costs, debt and ageing products, resulting in stagnant market share and low margins.
In a bid to turn the business around, Nanda roped in professionals to lead each vertical. October 2011 saw former Bajaj Auto executive S Sridhar taking over as the head of the farm-equipment business, which currently brings in 80% of the revenue. A year later, GVR Murthy of Tractors India joined as the head of construction equipment, a segment that contributes 15%. Dipankar Ghosh, with experience at John Deere, Caterpillar and Indian Railways, joined in October 2012 as the CEO of the railway products business, which now brings in 6%.
Though Sridhar and Murthy have since moved on, the management’s effort to address pain points, aided by recovery in the industry, nursed Escorts back to good health (see: Just about holding on) . Its revenue surged from Rs.39.86 billion in FY15 to Rs.50.16 billion in FY18, while operating margin vaulted from 5.47% to 12.18% over the same period. Profitability, too, soared from Rs.760 million in FY15 to Rs.3.47 billion in FY18 (see: Path to recovery).