Escorts Kubota has budgeted Rs 850 crore to Rs 900 crore of capital expenditure for FY27, split between a new manufacturing site and its existing operations.
The greenfield project takes Rs 450 crore to Rs 500 crore this year, most of it accounted for by the land, which has been allotted and paid for. Groundbreaking is due this month. Regular capex across the rest of the business takes the remaining Rs 350 crore to Rs 400 crore.
The project will cost around Rs 2,000 crore in total, and the schedule is demand-led.
"If we have expedited construction, then maybe the spend will be more," Bharat Madan, whole-time director and chief financial officer, told analysts on the Q1 FY27 earnings call on 3 August, adding that it was too early to fix an FY28 figure. Regular capex will stay in its current band.
The commitment follows a quarter of records at both businesses. Domestic tractor sales rose 22.9 percent to 35,457 units, while construction equipment volumes rose 27.4 percent to 1,344 machines.
Captive finance
The second call on capital is the company's own lending arm. Escorts Kubota Capital reached 10-12 percent penetration during the quarter and crossed 15 percent in July, running through around 250 onboarded dealers across a limited set of states. Southern states open this year to support new launches there. Madan expects 40-50 percent of the network covered by FY27 and a pan-India rollout by FY28.
The unit is pointed at markets the company has struggled to reach rather than at the ones it already leads.
"In the stronger market, the financing is not an issue," Madan said. Management is targeting an incremental volume gain of 20-25 percent in the territories where the unit operates.
Buyback
With that spending still modest against the balance sheet, an analyst put the company's cash surplus at close to Rs 10,000 crore, a figure management did not contest, and asked whether revised rules opened the way to a buyback.
"The scope for further buyback is very limited. You can't go beyond 5 percent if you continue to be listed," Madan said.
Promoters hold about 68 percent, and promoter and non-public shareholding together come to around 70 percent, which leaves little room under minimum public shareholding requirements. A buyback remains part of the capital allocation strategy but would need both promoters to align, and the mechanics favour public shareholders over promoters looking to hold or raise their stake.