Sona Comstar to buy Escorts Kubota’s railway business for Rs 1,600 crore

In a bid to diversify into the broader mobility space, auto component maker Sona BLW Precision Forgings Ltd (Sona Comstar) is acquiring Escorts Kubota’s railway equipment business for Rs 1,600 crore “as a going concern on a slump sale basis.”

Sona Comstar’s board approved the acquisition on Wednesday. The transaction, which is expected to be completed by September 30, 2025, will be in cash and does not include any shareholding or control in Escorts Kubota. The company also noted that acquisition is expected to be EPS accretive for us from the first year.

Gurugram-based Sona Comstar manufactures components such as differential assemblies, differential gears, starter motors, BSG systems, EV traction motors, motor control units, alternators, and transmission gears.

The company said it aspires to become one of the world's most respected and valuable mobility technology companies, and the new acquisition is in line with the vision and mission statement of the company in the mobility space.

“The railway industry presents long-term growth opportunities, and with the Railway Equipment Division business, we see significant potential to broaden our product range by incorporating advanced technology and engineered products," said Sona Comstar MD and Group CEO Vivek Vikram Singh.

Escorts Kubota’s business is largely focused on the agriculture and construction equipment sectors. Its railway business involves manufacturing, assembly and sales of products such as brakes, couplers, suspension systems, and friction and rubber products.

The railway business recorded Rs 950.41 crores in revenue during the financial year 2024. The division has also a few new products in pipeline, which include heating, ventilation and air conditioning systems, electrical control panels, vacuum evacuation systems, and automatic plug doors.

“By concentrating on areas that align with the long-term strategic vision of Kubota Group, EKL is paving the way for sustainable growth and innovation in the Agri Machinery and Construction equipment evolving market landscape,” said Seiji Fukuoka, deputy MD at Escorts Kubota.

Sona Comstar is likely to fund this acquisition through proceeds from a recently raised Rs 2,400 crore in a Qualified Institutional Placement.

READ MORE: Sona Comstar reports 16% YoY growth in Q2 net profit