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Mobike boom a boon for Escorts engineering unit

Partha Ghosh

The growth in sales of motorcycles in the domestic market has come as a boon for the engineering division of Escorts Ltd.

The division is expecting its turnover to more than double in the next three years from Rs 1.35 billion in 2000-01 to Rs 3 billion, riding on the post-sales demand for shock absorbers in the two-wheeler industry in the next few years.

The division has also developed its own gas shock absorbers without availing of foreign technology and has claimed that the country's largest automaker, Maruti Udyog, is showing interest in its products for use in Wagon R.

Nonetheless, it is still open to technology tie-ups and is negotiating with Japan's Tokiko for the same. Tokiko is yet to confirm its interest in the Indian market.

Incidentally, Escorts' plans to hive off the division into a joint venture has been temporarily shelved, said Devraj Singh, the company's business head and vice president, engineering division.

"After a few years of ailment, our sales are now picking up. We ended the last year with sales of Rs 1.35 billion (net of excise) and expect to close the current fiscal with Rs 1.65 billion. We are happy as long as we can generate cash for the group."

Singh added that in an industry scenario where a majority of international firms have set up base, clients (automobile makers) prefer sourcing parts and components from them since they have proven technology being used by their parents abroad.

In 1996, Escorts ceased to be a shock-absorber supplier to Maruti since Gabriel (which brought in technology from Kayaba) moved in with gas shock absorbers.

Since Escorts was not manufacturing gas shock absorbers, it lost business to the new players. It also could not boast of a technical tie-up with a foreign firm.

"Now Maruti has asked us to develop products for their Wagon R model. We are also making McPherson struts, etc. We expect to win a big order from Maruti soon," he said.

Apart from restructuring the auto suspension division, the group is also breathing fresh life to the railway equipment division by entering technical tie-ups with foreign firms in new product areas.

It has tied up with an Australian firm Rexlok for manufacturing rail-fastening systems. It has also started manufacturing non-asbestos, friction-less brake blocks and will soon start manufacturing couplers for mainline coaches with technology from Schaku, Germany. However, though there is a large business waiting from the Indian Railways -- which needs an upgradation -- investments in this direction is not adequate.

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