MIRA INFORM REPORT

Report Date :

19.01.2008

IDENTIFICATION DETAILS

Name :	ESCORTS LIMITED
Registered Office :	11, Scindia House, Connaught Circus - 110001, New Delhi
Country :	India
Financials (as on) :	30.09.2006
Date of Incorporation :	17.10.1944
Com. Reg. No.:	1860
CIN No.: [Company Identification No.]	L74899DL1944PLC001860
TAN No.: [Tax Deduction & Collection Account No.]	DELE00069G
PAN No.: [Permanent Account No.]	AAACE0074B
Legal Form :	It is a public limited liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturers of Agri Machinery, Auto-Components and Railway Equipment.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 40742800
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well – established and reputed company of Escorts Group. Directors are reported as experienced, respectable and having satisfactory means of their own. Trade relations are fair. Business is active. Payments are reported as usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office/Factory :	11, Scindia House, Connaught Circus - 110 001, New Delhi, India.
Tel. No.:	91-11-23310145
Fax No.:	91-11-23310271
E-Mail :	rnanda@del12.vsnl.net.in corpsect@ndb.vsnl.net.in
Website :	http://www.escortsgroup.com
Corporate Office :	15/5 Mathura Road, Faridabad – 121 003, Haryana
Plant :	· 18/4, Mathura Road, Faridabad – 121 007, Haryana · Plot No. 2, Sector 13, Faridabad – 121 007, Haryana · Plot No. 3, Sector 13, Faridabad – 121 007, Haryana · 115, Sector 24, Faridabad – 121 003, Haryana

DIRECTORS

Name	Mr. Rajan Nanda
Designation	Chairman and Managing Director
Age	59 Years
Qualification	Senior Cambridge, Training in UK and Germany
Experience	41 Years
Date of Joining	03.04.1970
Previous Employment	Harparshad & Company Limited - Director
Name	Mr. Anil Nanda
Designation	Vice Chairman and Managing Director
Age	50 Years
Qualification	Senior Cambridge
Experience	30 Years
Date of Joining	01.07.1981
Previous Employment	Intercontinental Travancore (Private) Limited
Other Directorships	Goetze (India) Limited, G I Power Corporation Limitecd, Goetze TP (India) Limited, G I Wind Power Company Limited, AN-GIP Leather (India) Limited, Escorts Farms Limited, Akme Project Limited, AN Enterprises Private Limited, Joint Investment Private Limited, GI Insurance Services Limited
Name	Mr. Nikhil Nanda
Designation	Executive Director and COO
Age	30 years
Qualification	BBA
Name	Mr. Y. H. Malegam
Designation	Director
Name	Mr. Nilesh Kampani
Designation	Director
Name	Dr. S. A. Dave
Designation	Director
Qualification	M.A. [Economics] Ph.D.
Other Directorships	1. HDFC Limited 2. Crisil Limited 3. SBI Gilts Limited 4. Future Software Limited 5. GIIC 6. Phoenix Township Limited 7. Captech Online Private Limited 8. Quantum Information Services Limited 9. Centre for Monitoring Indian Economy Private Limited 10. Merchant Media Limited 11. Indo National Limited 12. Spice Corporation Limited 13. Spice Net Limited
Name	Dr. Fredie A. Mehta
Designation	Director
Qualification	Ph.D. in International Economics from London school of Economics
Other Directorships	1. Siemens Limited 2. SKF Bearings India Limited 3. Goodlass Nerolac Paints Limited 4. Tata Investment Corporation Limited 5. Tata McGraw-Hill Publishing Company Limited 6. Rallis India Limited 7. IVP Limited 8. Tata Precision Industries Pte Limited
Name	Dr. M. G. K. Menon
Designation	Director
Qualification	B.Sc., M.Sc., Ph.D., D.Sc [h.c.], F.R.S.
Other Directorships	Indfos Industries Limited
Name	Dr. P. S. Pritam
Designation	Director
Qualification	M. A., LLB, Ph. D.
Name	Mr. Jai S. Pathak
Designation	Director
Qualification	BA (History), BA (Law: Oxon), MA (International Relations), LLM (Law: University of Virginia)
Other Directorships	IGate Global Systems Limited, Timken India Limited
Name	Mr. D. K. Mehrotra
Designation	Director
Qualification	B. Sc. (Hons)
Other Directorship	North Eastern Development Finance Corporation Limited
Name	Mr. N. R. Krishnan
Designation	Director
Name	Mr. S C Bhargava
Designation	Director

KEY EXECUTIVES

Name	Mr. G. B. Mathur
Designation	Vice President – Law and Company Secretary
Age	54 years
Qualification	B. Sc. ACS, LLB
Experience	29 years
Name	Mr. Devraj Singh
Designation	Business Head
Tel. No.	91-129-25284623
E-mail	ds@escortsasp.co.in
Name	Mr. B. R. Prakash
Designation	Head Marketing
Tel. No.	91-129-25283299
E-mail	brp@escortsasp.co.in
Name	Mr. D. K. Singal
Designation	Head-Operations
Tel. No.	91-129-25286482
E-mail	dks@escortsasp.co.in
Name	Mr. C. Grover
Designation	Head-Technical
Tel. No.	91-129-25280286
E-mail	charanjit_g@escortsasp.co.in
Name	Mr. A. K. Kalra
Designation	Head-Materials
Tel. No.	91-129-25286888
E-mail	kalaraak@escortsasp.co.in
Name	Mr. Sunil Jain
Designation	General Manager Exports and Marketing
Tel. No.	91-129-25281556
E-mail	skjain@escortsasp.co.in
Name	Mr. A. Kansal
Designation	Head - Plant Engineering
Tel. No.	91-129-25286888
Name	Mr. Anand Suresh
Designation	Head – Manufacturing Operations (AMG)
Age	56 years
Qualification	M. Tech., B. Tech., IIT
Experience	31 years
Name	Mr. Rakesh Chopra
Designation	Business Head and Senior Vice President (AMG)
Age	54 years
Qualification	FCA(Engineering and Wales), MBA (Cranfield, UK)
Experience	31 years
Name	Mr. K S Hawaldar
Designation	Head Operation RED- Engineering Division
Age	54 years
Qualification	BE Tech., Diploma in System Management
Experience	31 years
Name	Mr. Sriram Khattar
Designation	VP-Corporation Strategic Planning and Corporate Affairs
Age	46 years
Qualification	B. Com., (Hons.), FCA
Experience	22 years
Name	Mr. Sarkar M C
Designation	Head – R and D (AMG)
Age	57 years
Qualification	BE Tech., M. Tech.
Experience	34 years
Name	Mr. Pratha Sarkar
Designation	Vice President
Age	53 years
Qualification	B. Tech, MBA
Experience	28 years

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	Percentage of Holding
Promoters	01.73
Persons acting in concert	28.11
Institutional Investors	37.73
Others	32.43
Total	100.00

BUSINESS DETAILS

Line of Business :

Manufacturers of agri machinery, auto-components and railway equipment.

Products :

Item Code No.	Product Description
870130.09	Tractors
870880.00	Shock Absorbers
860729.00	Railway Parts

Exports :

Products :

Countries :

Australia, Botswana, Ghana, Mozambique, Namibia, Nepal, Poland, South Africa, Sri Lanka, Tanzania, Turkey and USA.

PRODUCTION STATUS as on 30.09.2006:

Particulars	Installed Capacity	Actual Production
Agriculture Tractors	98940	48282
Internal Combustion Engine	98940	49529
Round and Fiat Tubes	180000	120515
Double Acting hydraulic Shock Absorbers for railway Coaches	36000	16585
Centre Buffer Coupiers	1200	465
Automobile Shock Absorbers , Telescopic	4000000	1797821
Brake Block	1800000	530671
All types of brakes used by Railways	3600	5497
Others	-----	-----

GENERAL INFORMATION

No. of Employees :

Around 7464

Bankers :

Ø Standard Chartered Grindlays Bank Limited, New Delhi

Ø ABN Amro Bank, New Delhi

Ø Bank of America, NT & SA, New Delhi

Ø Bank of Baroda, New Delhi

Ø Citibank N.A., New Delhi

Ø Deutsche Bank, New Delhi

Ø Hongkong & Shanghai Banking Corporation, New Delhi

Ø HDFC Bank Limited, New Delhi

Ø Punjab National Bank, New Delhi

Ø State Bank of India, New Delhi

Ø State Bank of Travancore, New Delhi

Ø United Western Bank Limited

Facilities :

SECURED LOANS	30.09.2006	30.09.2005
	(Rs. in millions)
From Banks:
Cash Credit / Working Capital Tem loan	2063.300	2380.700
Interest Accrued and Due	5.500	10.000
Term Loans
From Banks	1911.500	1131.00
Interest Accrued and Due	10.800	3.400
From Others	232.800	292.000
Interest Accrued and Due	1.500	1.800
Under Asset Credit Scheme	0.000	0.900

Debentures:

12% Secured Redeemable Non Convertible Debentures

12% Secured Redeemable Non Convertible Debentures

Interest Accrued and Due

Notes:

Cash credit including working capital Term Loan form Banks:

Secured by hypothecation of stock and book debts on a pari passu basis.

Term Loan from, Banks

Punjab National Bank Rs. 1141.300 millions

Secured by first pari passu charge on immovable and movable assets

Axis Bank limited Rs. 581.000 millions

Secured against assignment of unsecured Subordinated Bond of idea Mobile Communications Limited

United Bank of India

Secured buy first pari passu charge on the Company Fixed assets and second and sub servient charge on immovable properties.

Term Loans from others:

Industrial Development Bank of India Rs. 222.900 millions

secured by first pari passu charge on immobile and movable assets

Life Insurance Corporation of India Rs. 9.600 millions

Secured against Insurance Policies

Vehicle Loans are secured against the Vehicles Financed Rs. 1.800 millions

UNSECUREDL OANS	30.09.2006	30.09.2005
Fixed Deposits	( Rs. in millions)
Others	444.400	992.700
Inter Corporate Deposits
From Others	474.900	738.400
Interest Accrued & Due	20.700	0.400
Banks Book Overdraft	512.800	244.600
Long Term Loans
From Bank	0.000	60.00
From Others	60.900	272.300
Interest Accrued & Due	0.000	5.300
Short Term Loans
From Banks	88.700	11.300
Rabo India Finance Private Limited	73.900	78.900
Interest Accrued And Due	2.000	1.500
Total	1678.300	2405.400

Note:

1. Book Overdraft includes Rs.400.00 millions towards cheques issued against amount lying in Sweep-in Fixed Deposit Account with a Bank

Banking Relations :

Satisfactory

Auditors :

Name :

S. N. Dhawan & Company

Chartered Accountants

Joint Venture :

· Carraro India Limited

· Hughes Communications India Limited

· Escorts Motors Limited

· Escorts Consumer Credit Limited

· Escortrac Finance And Investment Private Limited

· Escorts Finance Investment And Leasing Private Limited

· Har Prshad and Company Private Limited

Memberships :

Confederation of Indian Industry

Associates/Subsidiaries :

· Goetze (India) Limited

· Hughes Escorts Communications Limited

· Escotrac Finance & Investment Private Limited

· Escorts Finance Investment & Leasing Private Limited

· Escorts Auto Components Limited

· Escorts Finance Limited

· Yamaha Motor Private Limited (formerly Yahama Motor Escorts Limited)

· Long Agri Business LLC, U.S.A.

· Pol-Mot Escorts Spoolka z.o.o.

· Carraro India Limited

· Escorts Mahle Limited

· Escorts JCB Limited

· Escosoft Private Limited

· Escorts Motors Limited

· Escosoft Technologies Limited

· Escorts Construction Equipment Limited

· Escorts Automotives Limited

· Escorts Securities Limited

· Escorts Asset Management Limited

· Escorts Claas Limited

· Escorts Hospital and Research Centre Limited³

· Escorts Heart Institute and Research Centre Limited

· Escorts Heart and Super Speciality Centre Limited, Amritsar, Punjab

· Escorts Heart Care Centre, Kanpur, Uttar Pradesh

· Esconet Services Limited

· Cellnext Solutions Limited

· IServ India Solutions Private Limited

· Automatrix India Private Limited

· Escorts Telecommunications Limited

· Escorts Mobile Communications Limited [ceased to be a subsidiary w.e.f. 10.06.2004]

· Escorts Construction Equipment Limited

· Escosoft Technologies Limited

· Escorts Research and Development Limited

· Escosoft Singapore Pte. Limited

· Escorts Agri Machinery Inc., USA

· Esoft [Mauritius] Holdings Limited

· Escosoft Technologies [UK] Private Limited

· Escosoft Technologies [USA] Limited

· Escorts Healthcare Services Limited

· Escorts Telecom Services Limited

· Escotoonz Entertainment Private Limited

· Beaver Creeks Holdings LLC

· CA Escosoft Limited

· IFS Solutions India Private limited

· Farmtrac North America LLC, USA

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
77000000	Equity shares	Rs. 10/- each	Rs.770.000 millions
77300000	Unclassified Shares	Rs. 100/- each	Rs.7730.000 millions
		Total	Rs. 8500.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
72232240	Equity shares	Rs. 10/- each	Rs.722.300 millions

NOTES:

1 .Paid-up Capital includes :

(i) 18700 Equity Shares (previous year -18,700) allotted as fully paid-up for consideration other than cash pursuant to contracts,

(ii) Bonus Shares :

19434125 Equity Shares allotted before 1988 as fully paid-up by capitalising Share Premium of Rs. 2.200 millions and General Reserve of Rs. 192.100 millions.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		30.09.2006	30.09.2005	30.06.2004 (15 months)
SHAREHOLDERS FUNDS
1] Share Capital		722.300	722.300	722.300
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		9463.400	5459.000	5210.500
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		10185.700	6181.300	5932.800
LOAN FUNDS
1] Secured Loans		4225.400	4279.100	6129.000
2] Unsecured Loans		1678.300	2405.400	2814.700
TOTAL BORROWING		5903.700	6684.500	8943.700
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		16089.400	12865.800	14876.500
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		8666.000	5134.600	5774.100
Capital work-in-progress		214.700	65.400	35.200
INVESTMENT		4562.400	4970.400	6128.800
DEFERREX TAX ASSETS		764.000	786.300	315.200
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1724.900	1259.400	1200.400
	Sundry Debtors	2927.500	1768.400	2539.200
	Cash & Bank Balances	2157.200	1485.200	271.300
	Other Current Assets	3.100	1.200	1.200
	Loans & Advances	1994.400	1750.500	2207.300
Total Current Assets		8807.100	6264.700	6219.400
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	5465.800	3519.400	3439.600
	Provisions	1623.500	1024.600	307.000
Total Current Liabilities		7089.300	4544.000	3746.600
Net Current Assets		1717.800	1720.700	2472.800
MISCELLANEOUS EXPENSES		164.500	188.400	150.400
TOTAL		16089.400	12865.800	14876.500

PROFIT & LOSS ACCOUNT

PARTICULARS		30.09.2006	30.09.2005	30.06.2004 (15 months)
Sales Turnover		17507.700	12691.300	11210.200
Other Income		1320.400	5315.400	0.000
Total Income		18828.100	18006.7	11210.200
Profit/(Loss) Before Tax		344.400	310.200	(4217.400)
Provision for Taxation		154.400	[80.700]	1082.000
Profit/(Loss) After Tax		190.000	390.900	(3135.400)
Export Value		0.000	1404.900	1179.900
Imports Value
	Raw Materials	59.100
	Stores & Spares	289.100	273.600	519.500
	Capital Goods	0.900
	Others	0.000
Total Imports		349.100	273.600	519.500
Expenditures :
	Material , Manufacturing and operating	13379.700	9558.900
	Personnel	1587.000	1857.900
	Sales & Administration	1771.200	1633.500
	Interest	691.500	1417.900
	Bank & Finance Charges	158.000	178.600
	Depreciation	395.500	528.600
	Amortization of Miscellaneous expenditure	75.000	90.900
Total Expenditure		18057.900	15266.300	12894.000

SUMMARISED RESULTS

Year	30.09.2007
Type	Full Year
Sales Turnover	21021.300
Other Income	0.200
Total Income	21021.500
Total Expenditure	20055.600
Operating Profit	965.900
Interest	689.500
Gross Profit	276.400
Depreciation	449.700
Tax	29.500
Reported PAT	-64.400
Dividend (%)	0.000

KEY RATIOS

Year	30.09.2006	30.09.2005	30.06.2004
Debt-Equity Ratio	1.19	1.56	1.34
Long Term Debt-Equity Ratio	0.63	1.13	1.12
Current Ratio	0.96	1.05	1.28
TURNOVER RATIOS
Fixed Assets	1.95	1.14	1.11
Inventory	11.64	8.21	8.17
Debtors	7.61	4.86	3.92
Interest Cover Ratio	0.81	-0.42	-1.24
Operating Profit Margin(%)	6.57	-1.35	-11.31
Profit Before Interest And Tax Margin(%)	4.35	-5.39	-15.77
Cash Profit Margin(%)	1.06	-10.63	-15.33
Adjusted Net Profit Margin(%)	-1.15	-14.67	-19.79
Return On Capital Employed(%)	6.00	-4.18	0.00
Return On Net Worth(%)	-3.01	-26.19	0.00

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Subject was incorporated as a private limited company in October, 1944 at Lahore under the name and style of Escorts (Agents) Private Limited and later converted into a public limited liability company in December, 1959. Its' Company Registration Number is 1860.

The name of the company was changed to the present in January, 1980.

The company was promoted by Mr. H. P. Nanda, as a private limited liability company in October, 1944 at Lahore under the name Escorts (Agents) Private Limited and later converted into a public limited company in December, 1959. The name was changed to Escorts in January, 1960. The company is presently into production of farm equipment automobile components, railway ancillaries, etc.

As a part of restructuring its business, in 1994-95, the company hived off certain divisions into separate entities -- Escorts Communications and Escorts Construction Equipment whereby, manufacture of EPABX systems is being carried on by Escorts Communications and the manufacture of construction equipment by Escorts Construction Equipment. They are wholly owned subsidiaries of the company. Other subsidiaries are Escorts Claas, Escorts Automotive, Escotel Mobile Communications, Escorts Hospital & Research Centre, Escorts Agri Machinery Inc, Escorts Motors, Escosoft Technologies Limited, IFS Solutions India Private Limited, Cellnext Solutions Limited, Escorts Asset Management Limited and Escorts Securities Limited. Escotel Mobile Communications Limited ceased to be a subsidiary with effect from 10th June, 2004.  

The company decided to sell its entire equity holdings in the Mobile Telecom Subsidiaries, viz. Escotel Mobile Communications Limited and Escorts Telecommunications Limited to Idea Cellular Limited. With this divestment the company will totally exited from Cellular Mobile business. 

During the year 2004-05, Escorts Telecommunication Limited (ETL) was awarded licenses to operate in the telecom circles of Punjab, UP (East), Rajasthan and Himachal Pradesh. Further Subject had entered into an agreement with Idea Cellular Limited to divest its shares in ETL in January 2004. 

Escorts Construction Equipment Limited (ECEL), launched a 12T Vibratory Soil Compactor in technical collaboration with Hamm AG, Germany to strengthen its road compaction range during the year 2004-05. 

Subject signed a MoU with Long Manufacturing (NC) Inc, North Carolina, USA for a joint venture company, Long Agribusiness LLC, for manufacture, assembly and sale of tractors. It expects to expand its exports and establish a long term presence in the international markets through a part equity ownership and management participation. The company has entered into exclusive distributorship agreement with Traksan for sale of the company's Farmtrac-60 tractors in Turkey. 

As a part of new exports strategy, the company has decided to buy distribution companies abroad for marketing tractors. It has proposed to establish one or more companies abroad. The company's overseas investment plan is in view to explore the possibility of establishing, manufacturing, trading, joint ventures and other business operations overseas. It has signed a MOU with Long Manufacturing (NC) Inc., North Carolina, USA for a joint venture company, Long Agribusiness LLC, for manufacture, assembly and sale of tractors. It expects to expand its exports and establish a long term presence in the international markets through a part equity ownership and management participation. The company has entered into exclusive distributorship agreement with Traksan for sale of the company's Farmtrac-60 tractors in Turkey.

The Escorts Group is investing Rs. 3000 millions in the agri-machinery business. Of this, Rs. 2000 millions would be invested in the tractor plant at Pune. It is also setting up a joint venture with the Carraro Group of Italy, a world leader in axles and transmissions. Carraro holds a majority stake of 51% in the joint venture, Carraro India, while balance is held by the company.

Subject had plans to raise $ 400 millions through a 30-year bond issue in the overseas market to fund its ambitious plans of new foreign acquisitions and to finance its domestic expansion programme. Besides, additional funds were required to meet its investment needs to set-up a new manufacturing facility in Poland that would cater to the needs of the European tractor market.

The company has embarked upon Business Process Reengineering (BPR) in all its plants, to match global standards which resulted in a quantum jump in quality and productivity parameters.

Escorts Heart Institute, the company's subsidiary is setting up another 200-bed heart centre in Jaipur.

It is planning to leverage this brand equity without comprising on the quality of medical services. The Jaipur Hospital will be set up at a cost of Rs. 800 millions and is expected to be completed soon. The heart institute in Delhi and Jaipur will be in addition to the existing general hospital at Faridabad.

Escorts Heart Institute (EHI), Escort's subsidiary is setting up another 200-bed heart centre in Jaipur, it hopes to set up a chain of cardiac care units in the country. It is planning to leverage this brand equity without compromising on the quality of medical services. The current facility in New Delhi is being expanded from 225 beds to 321 beds. The heart institutes in Delhi and Jaipur will be in addition to the existing general hospital at Faridabad. The Faridabad hospital capacity was also expanded from 151 beds to 186 beds. 

Escorts Heart Institute and Research Centre Limited (EHIRC), during the year 2004-05, acquired 100% paid up equity capital of Escorts Hospital and Research Center Limited (EHRCL) running a multi-speciality hospital in Faridabad (Haryana) and consequently, EHRCL became a subsidiary company of EHIRC. 

During March 2005, Escorts Agri Machinery Inc, the wholly owned subsidiary of the company has bought out its joint venture partner Farmtrac Tractors Europe Spolka Zoo which is a Poland based company. The acquisition would enable the company to expand its international base by increasing the reach of its Farmtrac range of tractors into the extremely competitive Western European markets and fast growing African, Asian and Latin American markets. The company is also poised for aggressive growth in tractor exports as the announcement comes close on the heels of the major order worth 8.56 million USD from the Ghana government for tractors and other farm equipment.

DIRECTOR REPORTS:

MANAGEMENT DISCUSSION AND ANALYSIS

1, OVERVIEW

The Company had, in the previous year, decided to strategically focus its economical and managerial resources on three major businesses and to divest the other businesses of the Company over a period of time. The three core businesses identified by the Company for long term growth are Agri Machinery, Railway Equipment and Auto Components and Construction Equipment. The Company is a dominant player in each of these businesses and possesses requisite strengths like technical know-how, solid brand equity, a very effective and loyal distribution network, technical manpower and professional management to take these businesses to the global scale. The decision to remain focused on the core business resulted in remarkable turnaround in the performance of the Company.

The Company is slowly getting out of all the unrelated business activities and the sale of the Company's stakes in the software companies as also divestment of its 49% stake in the joint venture, Carraro India Limited, were steps aligned with the overall vision to remain focused on the three core businesses.

2. AGRI MACHINERY BUSINESS

The primary operations of the Company, the Agri Machinery Business Group (AMG), demonstrated significant improvement in performance during the current year. The resurgence demonstrated by AMG was across the entire operations of the Business and in a balanced manner which is evinced by the results with an increase in turnover from Rs. 10519.700 millions (15 months previous year) to Rs. 16002.400 millions (12 months this year) and in EBIT from a loss of Rs. 1118.800 millions (15 months previous year) to a positive of Rs. 910.600 millions (12 months this year). In essence, culled out for the same period of 12 months, this indicates a doubling of turnover, a significant swing in EBIT and underpins AMG's commitment to profitable growth.

a) Industry

The Indian Tractor Industry witnessed robust growth for the third consecutive year with an increase of 26.6% in the financial year 2005-2006. The Industry achieved a record level of 0.308 million Tractors for the domestic market, topping the erstwhile high of 0.270 millions in 1999-2000. The current growth has been driven by the Government's increased thrust on developing Agriculture with a specific focus on yield improvement to meet the increased requirement of Agricultural produce emanating from the overall increase in disposable incomes and the population growth. Arable land area remains limited and water tables are shrinking, which again add to the need for more mechanized farming and hence the need for more Tractors. Nationalized and Private Banks, through focused and innovative retail financing initiatives, have also increasingly supported the Indian farmer in his procurement of agricultural machinery. The Industry has also registered an impressive increase of 16% in Exports which volumes have now begun significantly contributing to the Industry's total production. Indeed the Indian Tractor Industry has made significant international investments, which are now bearing fruit.

b) Business Strategy

The Company launched the year looking at the Business in its Market Scope, Product Scope, Geographical Scope and Learning Scope. They laid down a clear Vision for the AMG Business and articulated a clear strategy. They deployed concurrent action plans across functions while integmti'ic processes across these functions to deliver customer satisfaction at one end and Shareholder Value at the other. Key was leveraging the Strategy and Review loop. They have embarked on transformational change.

c) Sales and Marketing and Exports

Repositioning of their Brands was integral to their Marketing Strategy. They enhanced Reach and Access by institutionalizing a National Sales and Service grid pan India. Today they have over 1200 dealers, sub-dealers, distributors and stockists, over 200 Sales Offices. Their focus was to make 3 Tri-Offering to their valued customer of Product, Service and Spares instead of Product alone. Service seeded the unique measurable of Customer Satisfaction Index and Spares became a key facilitator of referrals. They converted Exports from an activity to a Business, which also sought profitable growth. All this enabled AMG to sell 47,612 tractors during 2005-2006 and the enablers were both the Domestic and Export Markets where they doubled our volumes in each. Their growth was higher than the market signaling significant recovery in market share. They repositioned their two International Subsidiaries in their respective markets; enhanced their Reach and Access by mirroring a similar strategy as in India and thereby leveraged competitive advantage. Both Subsidiaries have demonstrated significant growth. In addition, they increased their geographical spread and now cater to 31 countries.

5. FINANCIAL PERFORMANCE

There was a remarkable turnaround in the performance of the Company during the year. Sales Revenue grew by 72% over the previous year on an annualised basis. PBDIT from business operations was Rs.1140.900 millions versus loss of Rs.100.900 millions in the previous 15 months period – a turnaround of Rs.1240.000 millions. The interest and finance cost at Rs.849.500 millions was significantly lower than the previous 15 months figure of Rs.1596.500 millions. Consequently, the cash profit before tax from business operations was Rs.291.400 millions as opposed to a Cash loss of Rs.1697.400 millions in the previous 15 months period, a turnaround of almost Rs. 2000.000 millions. The operational turnaround was further supported with income from investments of Rs. 949.300 millions primarily on account of sale of 49% shareholding in the joint venture Carrara India Limited. After providing for Exceptional items of Rs. 425.800 millions (Rs. 2430.200 millions in the previous period), the Company recorded Profit Before Tax of Rs. 344.400 millions and Profit After Tax of Rs. 190.000 millions in the current year as compared to Rs. 310.200 millions and Rs. 390.900 millions respectively during the previous period.

The Company also revalued its Land during the year to reflect its current market value resulting in an addition of Rs. 3876.400 millions in the Reserves as Revaluation Reserve.

The sharp turnaround in the performance of the Company was possible due to a combination of factors.

(a) The top management team of the Company was revamped with induction of fresh blood from outside the Company under the leadership of the Executive Director and Chief Operating Officer. A host of initiatives were undertaken, under the new leadership with the overall objective of establishing the company as a serious and dominant player in the Agri space.

(b) The market network was considerably widened with the opening of new distribution points and new offices. (c) Funds available from the divestment of the healthcare business were used to reduce and reprofile the overall debt structure of the company and ramp up the business operations, which were languishing till last year due to paucity of working capital funds.

(d) A renewed partnership of the Company's management together with the new Union leadership was able to successfully conclude a "long-term agreement" for all manufacturing locations in a very harmonious manner. The agreement helped the Company to increase its overall production capacity from 72,000 tractors to approximately 1,00,000 tractors per annum for which very little capital expenditure is to be incurred. This will further help the Company in making the optimum use of its productive assets.

OPPORTUNITIES AND THREATS

Agri opportunity

The growing domestic demand for food grains and Agri products promises a very good future for Company's core business. They believe that India can be a major exporter of grains and other Agri products and increased demand, both Domestic and Exports, will call for increased yields, which besides other key inputs will result in increased Farm mechanization. Tractor density as well as the HP input per hectare is extremely low relative to international standards, tractor population today is concentrated in 10% of villages and even today 70% of their villages do not have a tractor. All this shows great potential for the growth in this industry.

Auto Components/Railway Opportunity

India has become a vary important-centre for manufacture of auto components in the world, presenting huge opportunities for Companies in this Sector. The Company has started looking at the possibility of manufacturing and marketing various auto components for future growth. Indian Railways with majprmodernization initiatives present another area of opportunity for the Companies Railway Equipment business. Construction Equipment Business the Construction Equipment Business is done by the company through its 100% subsidiary Escorts Construction Equipment Ltd. (ECEL). ECEL has achieved a sharp increase in its gross revenues in the financial year 2005-06. Turnover was at Rs. 3156.700 millions in Financial Year 2005-06 as against Rs. 1757.800 millions achieved in the previous fiscal year. Profit before tax was substantially higher at Rs. 267.600 millions as against Rs. 49.700 millions in the previous fiscal year. Apart from continuing growth in the material handling equipment range, the business also witnessed significant growth in road construction equipment segment as well. The road construction equipment segment is showing further growth in the current year 2006-07. The business is on the growth path, which is well supported by the favourable market demand prevailing in the industry. New models and variants are being worked upon, which will be introduced in the market in future. ..'

In this backdrop the business is expected to further increase its revenues in the current fiscal year 2006-07.

SCHEME OF COMPROMISE AND ARRANGEMENT

The Company has filed in the High Court of Delhi a Scheme of Compromise and Arrangement ("Scheme") to bail out the fixed deposit holders of Escorts Finance Limited. The Scheme was approved by the Shareholders, Secured and Unsecured Creditors of the Gdrnpany and the Fixed Deposit holders, and Secured Creditors of Escorts, Finance Limited on 10* May, 2006 and 5m May, 2006 respectively in the Court convened meetings.The Scheme is still to be approved by the High Court of Delhi.

FIXED ASSTES:

· Land Freehold

· Building

· Plant and Machinery

· Vehicles

· Leasehold Improvements

· Prototypes

· Technical Know how

· Software Development

· Capital Work in progress

· Capital Advances

The company has joint ventures with:-

· Goetze (India) Limited

· Hughes Escorts Communications Limited

· Escotrac Finance & Investment Private Limited

· Escorts Finance Investment & Leasing Private Limited

· Escorts Auto Components Limited

· Escorts Finance Limited

· Yamaha Motor Private Limited (formerly Yahama Motor Escorts Limited)

· Long Agri Business LLC, U.S.A.

· Pol-Mot Escorts Spoolka z.o.o.

· Carraro India Limited

· Escorts Mahle Limited

· Escorts JCB Limited

· Escosoft Private Limited

· Escorts Motors Limited

The company is in trade terms with :

· Agro Engineering Works

· Asiad Engineering Works

· Allena Auto Industries Limited

· Amar Udyog

· Amar Engineering Works

· Auto Trac Engineers

· A. R. Industries Private Limited

· Alhind Metal Industries

· Auto & General Castings

· B. S. Industrial Company

· BVA Auto Private Limited

· Brytax Auto Industries Limited

· Centrifugal Casting Company

· Coolwels Automobile Engineers

· A. R. Industries Private Limited

· Super Alloy Cast

· Tightwell Fastners

· D. P. Auto Industries

· Duro Engineers Works

· Delite Auto Products

· Delhi Forge Limited

· Delight Pressings

· Lakhani Rubber Works

· Lumax Filters Private Limited

· Modern Machine Tools

· Hi-Lux Automotive Private Limited

· Jayem Auto Industries Private Limited

· Bhatia Electricals Private Limited

· Bajwa Appliances Private Limited

· Metal Pressing & Engineering Works

· A.J. Tech Equipment

· A.P. Engineering

· Akme Engineering Works, Kolkata

· Akai Metal (India)

· Jaico Steel Fasterners Limited

· Jayem Auto Industries Private Limited

· Kamal Enterprises

· Kunaal Automotive Components

· Royal Tools (India)

· S K Tools

· S K Engineering

· Saroj Iron Industries

· Sawan Industries

· Sethi Industries Corporation

· Spire India

· Pee Cee Engineering

· Rahul Induction Private Limited

· Vallabh Industries

· New Pragati Udyog

· Nobel Engineering Works

· Amritsar Machine Tools

· Shivon International

· Steerwels

· Motoren Industries

· Luxmi Automats

· Padam Engineers

· Delight Pressings

· J. K. Engineers

· Jai Industries

· Roop Polymers Limited

· Yogesh Engineering Works

WEBSITE DETAILS:

The Escorts Group, is among India's leading engineering conglomerates operating in the high growth sectors of agri-machinery, construction & material handling equipment, railway equipment and auto components.

Having pioneered farm mechanization in the country, Escorts has played a pivotal role in the agricultural growth of India for over five decades. One of the leading tractor manufacturers of the country, subject offers a comprehensive range of tractors, more than 45 variants starting from 25 to 80 HP. The company and Powertrac are the widely accepted and preferred brands of tractors from the house of Escorts.

A leading material handling and construction equipment manufacturer, they manufacture and market a diverse range of equipment like cranes, loaders, vibratory rollers and forklifts. Subject today is the world's largest Pick 'n' Carry Hydraulic Mobile Crane manufacturer.

Subject has been a major player in the railway equipment business in India for nearly five decades. Their product offering includes brakes, couplers, shock absorbers, rail fastening systems, composite brake blocks and vulcanized rubber parts.

In the auto components segment, Subject is a leading manufacturer of auto suspension products including shock absorbers and telescopic front forks. Over the years, with continuous development and improvement in manufacturing technology and design, new reliable products have been introduced.

The Escort Group has also been operating in the ITES and financial services sectors.

Throughout the evolution of Subject, technology has always been its greatest ally for growth. In the over six decades of their inception, Subject has been much more than just being one of India's largest engineering companies. It has been a harbinger of new technology, a prime mover on the industrial front, at every stage introducing products and technologies that helped take the country forward in key growth areas. Over a million tractors and over 16,000 construction and material handling equipment that have rolled out from the facilities of subject , complemented by a highly satisfied customer base, are testimony to the manufacturing excellence of subject. Following the globally accepted best manufacturing practices with relentless focus on research and development, subject is today in the league of premier corporate entities in India.

Technological and business collaboration with world leaders over the years, Globally competitive indigenous engineering capabilities, over 1600 sales and service outlets and footprints in over 40 countries have been instrumental in making Escorts the Indian multinational. At a time when the world is looking at India as an outsourcing destination, Subject is rightly placed to be the dependable outsourcing partner of world's leading engineering corporations looking at outsourcing manufacture of engines, transmissions, gears, hydraulics, implements and attachments to tractors, and shock absorbers for heavy trailers and armored tanks.

In today's Global Market Place, Subject is fast on the path of an internal transformation, which will help it to be a key driver of manufacturing excellence in the global arena. For this they are going beyond just adhering to prevailing norms, they are setting their own standards and relentlessly pursuing them to achieve their desired benchmarks of excellence.

Milestones

1947

After partition the Registered office of the Company was shifted from Lahore to New Delhi. The name of the Company was changed from Escorts (Agents) Private Limited to Escorts Limited upon its conversion into a public limited liability company.

1959

The company was incorporated on 21st December, at Lahore. The Company manufactures motor cycles, tractors, automotive parts, railway shock absorbers, agricultural implements, X-rays equipment, heating elements, etc.

The company has been functioning as a representative of well-known foreign manufacturers like M.A.N. Company of the USA, Massey Ferguson of the United Kingdom and Canada and several others.

The company had an all-round sales and service organization and has put up in conjunction with Garden Reach Workshops, Kolkata, a marine service base for servicing ocean going vessels equipped with M.A.N. promulsion and auxiliary engines. The company had a network of all-India dealers for sale of products manufactured by itself and by its subsidiaries.

Capital structure reorganized. Equity and `A' Equity shares converted into one class of Rs. 10/- each. 200 Preference shares were subscribed for. 2,000 Preference and 17,500 No. of Equity shares allotted to Mahle Komm-Ges, West Germany, against supply of machinery and technical know-how. The remaining shares issued as rights. The new preference shares redeemable after 5 years from the date of issue at the company's option.

1960

The Company commenced the manufacture of pistons and established at Bahadurgarh, near Patiala, in collaboration with Mahle Komm-Ges Bad Constant, West Germany.

The company undertook a phased expansion of the installed capacity of pistons from 7,21,000 to 10,80,000 numbers per annum and the installed capacity of piston pins from 6,60,000 to 9,90,000 numbers per annum.

1962

The company commenced commercial production of X-ray equipment, railway shock absorbers and heating equipments in technical collaboration with the Westinghouse Trading Company (Asia) Limited, New York, Eheimmetall GmbH, West Germany and Eltra K. G., West Germany respectively.

1965

The Company entered into a technical collaboration agreement for the manufacture of transmission and gears for Escort tractors with Motoimport Warszawal, Poland, by outright purchase of drawings.

The company acquired near its existing plant at Faridabad, an area of 23 acres together with 55,000 sq. fts. of built-up space at a cost of Rs 4.300 millions for scientific research activities.

1968

1,229 Preference shares in 1968 and 336 Preference shares in 1969 subscribed for. In December, 1969, 580, 608 Bonus Equity shares issued in proportion 1:4. 25,000 9.5% `A' Preference shares offered to public in August, 1969 (redeemable on 15-8-1981).

1970

580,608 Right Equity shares issued at a premium of Rs. 4/- per share in the proportion 1:5.

1973

The company undertook to set up a 100% export oriented unit for the production of X-ray equipment in the Santacruz project area, in collaboration with Compagnie General de Radiologie who brought over Westinghouse Manufacturing Company, under the name CGR India Limited, was incorporated.

1974

1741824 Bonus Equity shares issued in the proportion 1:2.

1977

3135283 Bonus Equity shares issued on 31-12-1977 in proportion 3:5.

1978

The following contracts were secured for execution (i) Farm implements manufacturing plant, (ii) Bicycle assembly plant and (iii) Raw material sold to support PVC plant.

1979

The company concluded an agreement with Andhra Pradesh Scooters Limited, to produce Rajdoot motorcycles in their plants at Hyderabad for distribution in Southern States. The company was to undertake, in due course, production of scooters for Andhra Pradesh Scooters Limited, for distribution in Northern States.

50,16,453 bonus equity shares issued in prop. 3:5. 1980

A new tractor model Escort-345 was introduced in the first quarter of the year.

1981

Towards the end of the year, Escort-355 tractor with three cylinder and 47 HP engine was introduced.

1985

The Company commissioned a project for the manufacture of 1,50,000 - 100 cc motor cycles per annum in technical collaboration with Yamaha of Japan.

Other products proposed to be manufactured were paddy transplanters, a small size tractor in collaboration with Japan, boilers and other equipment for collection of bio-mass from straw and other agricultural wastes.

Government approval was obtained for a new range of road construction machinery i.e. paver finishers butimen distributors, aggregate spreaders, pavement profilers, etc. Approval was sought for the manufacture of vibratory compactors in collaboration with Dynapac of Sweden.

During July the Company issued 20,00,000 - 15% non-convertible debentures of Rs. 100/- each for Rs 200 millions and offered them as rights to its resident Indian equity shareholders. The Company allotted a further 10,00,000 - 15% debentures to retain the excess subscription. Rs 279.000 millions out of this issue of Rs. 300.000 millions was utilized for working capital and the balance Rs 21.000 millions for normal capital expenditure.

1986

The company undertook expansion of the installed capacity of shock absorbers to 15 lakh numbers, in technical collaboration with Bilstein AG of West Germany. The Company also introduced disk brakes for Indian Railways.

It was proposed to introduce tractors with engine capacity below 1,800 cc for which excise duty exemption was announced.

The company entered into a technical collaboration agreement with Mercury Marine (Brunswick Group), U.S.A. for the manufacture of 24,000 outboard motors per annum.

The company established facilities for the manufacture of nearly 5,000 line sets of electronic telephone exchanges (EPABX) in collaboration with Jeumant Schneider of France.

The company proposed to manufacture the fuel-efficient Citroen 2 CV (6) car in collaboration with Citroen of France.

During February 15% secured redeemable debentures of the aggregate value of Rs. 50 millions were privately placed with Army Group Insurance Fund.

1987

During June the Company issued 10,00,000-12,5% fully convertible debentures of Rs. 350/- each. Out of this, 3,00,000 debentures were offered to the existing equity shareholders of the Company as rights in proportion 1 Debentures : 71 No. of Equity shares (all were taken up).

Out of the remaining 7,00,000 debentures, the following debentures were reserved for preferential allotment; (i) 50,000 debentures to employees and working directors of the Company and (ii) 1,40,00 debentures to non-resident Indians on repatriation basis. The remaining 5,10,000 debentures, along with the unsubscribed portion of 1,03,085 debentures were offered for public subscription during June.

Additional, 2,50,000 debentures were allotted to retain over subscription. (75,000 debentures to equity shareholders of the Company and 1,75,000 debentures to the public).

As per the terms of the issue, on 31st December, Rs 175 was converted into 5 fully paid-up equity shares of Rs 10 each at a premium of Rs. 25/- per share and on 30th June, 1988, the remaining Rs. 175/- was converted into 5 fully paid-up equity shares of Rs 10 each at a premium of Rs 25 per share.

80,26,325 bonus equity shares issued in proportion 3:5 and were allotted on 30.3.1987. All Preference shares redeemed on 30.11.1987. 62,50,000 No. of equity shares allotted (premium Rs. 25/- per share) on 31.12.1987 in conversion of debentures.

1988

62,50,000 No. of Equity shares issued (prem. Rs 25/- per share) in conversion of 12.5% debentures.

1990

The company privately placed with financial institutions 35,00,000-14% secured redeemable non-convertible debentures of Rs. 100/- each. The debentures were redeemable in three equal instalments on the expiry of the 6^th, 7^th and 8^th years from the date of allotment of the debentures.

1994

The new products i.e., 3 cylinder engine tractor and a 50cc Moped were launched.

1995

Escorts 40 H.P. and two models of Farmtrac, VIZ 50 and 60 H.P. tractors were introduced. The Company combined all synergistic product activities in Escorts group of companies into independent and autonomous entities.

Escorts Tractors Limited was merged with the company effective 1st April. The shareholders issued 3 equity shares of the company for every two equity shares of erstwhile Escorts Tractors Limited. Accordingly 227,75,452 No. of equity shares of the company was allotted.

Escorts JCB Limited, Escorts Class Limited, Escorts Automotive Limited, Escorts Herion Limited, Escorts Communications Limited, Escorts Construction Equipment Limited, Escorts Finance Investments and Leasing Limited are all subsidiaries of the Company.

27,04,226 No. of Equity shares (prem. Rs 130.17) allotted to promoters on conversion of warrants. 22,775,452 shares allotted to shareholders of erstwhile Escorts Tractors Limited.

1996

The company proposed to set up a joint venture company with equity participation from Mahle GmbH (Germany). Piston manufacturing activity of the company was proposed to be transferred to the said joint venture company.

The company has decided to form a joint venture to manufacture shock absorbers. Company is at advanced stage of negotiations with COFAP of Brazil.

Company has decided to Spun off Escorts Hospital & Research Centre into a separate corporate entity.

The Escorts Employees Ancillaries Limited manufactures carburettors presently catering to the needs of Rajdoot motorcycles. More components like nipples, spokes, etc., were being added with technical know-how from Japanese manufacturers.

56,56,381 No. of equity shares allotted on conversion of warrants at a price of Rs. 35/- per share.

1,24,059 No. of equity shares allotted on conversion of warrants issued to the shareholders of erstwhile, Escorts Tractors Limited at a price of Rs. 33.33/- per share.

1997

The Company undertook to set up a tractor plant with a capacity of 18,000 tractors p.a. with a total cost of Rs. 2000 millions at Ranjangaon in Maharashtra.

The Company has entered into a joint venture with Carraro SPA of Italy and promoted a joint venture company under the brand name Carraro India Limited to manufacture transmission to be used in its higher HP range of tractors at a cost of Rs. 1100 millions.

83,956 shares issued against warrants of erstwhile Escorts Tractors Limited. 28,17,456 No. of equity shares issued on conversion of warrants.

The company has recently entered into a joint venture agreement with Yamaha Motor Company Limited of Japan for setting up a new venture Escorts Yamaha Motor Limited (EYML) on the basis of equal participation in capital.

The company has also signed a 50:50 joint venture agreement with Mahle GmbH of Germany to manufacture automotive and railway pistons, gudgeon pins. This venture would take over Escorts existing plant in Bangalore and Patiala.

The Rs. 29000 millions Escorts group of companies is setting up a Rs. 2500 millions industrial complex at Ranjangaon in Pune.

Hughes Escorts Communications (HECL) a joint venture between Hughes Network Systems Inc (HNS) and Escorts, announced a tie-up with Datacraft RPG to market satellite based wide area communications solutions. Under the agreement, Datacraft RPG will be a marketing associate, offering HECL's V-sat based communications network as part of the integrated solutions designed for its customers.

The company’s transport and agri-equipment company, is exploring the possibility of tying up with Yanmar of Japan for manufacturing high-speed paddy transplanters in India. Escorts Yamaha Motor Limited (EYML), launched a brand new motorcycle, the RXZ.

Escorts Yamaha Motor Limited (EYML), has been awarded the ISO-9001 certificate by TUV Bayern for its manufacturing facility at Faridabad, Haryana.

Carraro India Limited, a 51:49 joint venture between the $200-million Carraro SpA of Italy and the Rs. 16500 millions. The company has tied up its entire debt with IFC Washington and Exim bank.

1998

The company has signed an MoU with Long Manufacturing Inc.

Close on the heels of the introduction of sporty look Yamaha RXZ late last year, SMM Escorts and Escorts Yamaha Motor Limited (EYML), the joint venture between Escorts Limited and the Yamaha Company Limited of Japan had launched yet another new model - Yamaha RX-135 - in Maharashtra.

The company, the flagship company of the Rs. 35000 millions Escorts Group, which is engaged in the manufacture of tractors, has signed an MoU (Memorandum of Understanding) with an American company at North Carolina to acquire 49 per cent equity worth $9 millions.

Escorts Yamaha has launched Yamalube, a two-stroke motor oil, developed by Yamaha Motor Corporation, Japan.

The company's turnover declined to Rs. 13197.000 millions due to depressed market conditions.

The Company launched a new `Powertrac' range of tractors with vastly improved engine performance, fuel consumption and meeting the emission norms not only in the domestic markets but also complying with very stringent EPA norms prescribed in the USA and other overseas markets.

10,96,672 No. of equity shares of Rs. 10/- each (premium Rs. 25/- per share) allotted against detachable warrants. 30,00,000 No. of equity shares allotted against warrants which were issued to the employees under ESOS on preferential basis. Another 70,505 No. of equity shares of Rs. 10/- each (premium Rs. 25/- per share) allotted against detachable warrants.

1999

The company, the second largest tractor manufacturer in the country, was set to launch its new tractor, Farmtrack 45, in the US next month after a silent entry in the domestic markets in August last.

The fall in profits was mainly due to the labour strike which lasted for 70 days and resulted in production loss.

2000

The company had approved the proposal to divest 24% equity in Escorts Yahmaha Motor Limited (EYML), a joint venture between company and Yamaha Motor Company (YMC), Japan, manufacturing a wide range of motorcycles in India for the domestic market and exports.

The company has launched Esconet Services Limited. This company is a 100% subsidiary of company.

The Company has launched its wheel type crop harvestor.

Yamaha Motor Escorts Limited the joint venture between Yamaha Motor Company Limited of Japan and the Delhi-based Escorts group, has launched a new 100cc four stroke motorcycle (Crux).

The company would be launching tractors with higher horse power in the range of 60hp - Farmtrac 70 - by end of December, in a bid to push its market share to over 22% in 2001.

On June 13th Escort withdraws from Yamaha Joint Venture. Yamaha set to buy out Escorts share in their Indian joint venture, by June 30, Yamaha India becomes the first 100% subsidiary in Asia for the Japanese motorcycle company.

The Rs. 32000 millions, Delhi-based Escorts Group has launched issuer India Solutions Private Limited, a wholly-owned subsidiary with services to address the demand for information technology (IT) infrastructure related corporate solutions.

2002

The company, on July 12, 2002 announced the divestment of its equity in Escorts JCB Limited and Escorts Class Limited in favour of its joint venture partners, J C Bamford UK and Class (Germany), respectively.

The company has entered into an agreement to sell its entire 60% equity holding in Escorts Class Limited for a consideration of 13.200 millions Euros (approx. Rs. 630 millions as per the current exchange rates).

Escorts announces appointment of Rohtash Mal as Executive Director and CEO of Agri Machinery Group (AMG)
New Delhi, 26th November 2007

Escorts today announced the appointment of Mr. Rohtash Mal as the Executive Director & Chief Executive Officer of its Agri Machinery Group.

An alumnus of IIM Calcutta and IIT Delhi, Mr. Mal has over 27 years of experience in managing a diverse range of industrial and commercial enterprises. In his previous assignment Mr. Mal was the Chief Executive of Bharti Fieldfresh Ltd. He started his career with Ballarpur Industries Ltd. where he went on to head the Paper Division as its Vice President for Sales & Marketing. Mr. Mal was also the Chief General Manager - Marketing & Sales at Maruti Udyog Limited and later the Chief Executive with Bharti Airtel Ltd. in its mobility and broadband / telecom services business verticals.

On his appointment, Mr. Rajan Nanda – Chairman of Escorts said, “With continued significant focus being laid on agriculture and farm mechanization in the country, we have a great opportunity on our hands. Mr. Mal’s rich experience in successfully driving business growth in sectors like paper, automobiles, telecom and retail will help us further improve our competitive advantage. We are confident that Mr. Mal’s strong business orientation will place Escorts in a stronger position in the Agri Machinery sector.”

NEWS

December 13, 2000

Escorts Limited - Analyst Meet

Given the current state of affairs in the automotive industry, it was a surprise to see Escorts inviting analysts for an analyst meet cum plant visit in Faridabad. It was a day-long program, which began with a visit to the company's tractor plant. Later there was a presentation on the company's future strategy in its core business of agricultural machinery.

Escorts believes that given the low tractor density of 0.4 unit per 1000 hectares in India (as compared to a figure of 0.9 in developing countries and 1.4 worldwide), the future growth prospects for the tractor industry is good. The company expects action in the medium and heavy powered segments after the exercise to rationalize excise duty rates during the last Union Budget. As part of its expansion drive, the company will focus its energy at increasing its present dealer network of 400. The thrust will be in the southern regions where it has a minor share of about 5%. This is also the region, which has been witnessing a high growth in tractor sales in the past few years.

Escorts products encompass a wide range of tractors starting from the 25-30 HP segment to the 70-75 HP segment. It sells tractors under the brand names of Escort (25-35 HP economy range), Powertrac (30-45 HP value range) and Farmtrac (30-75 HP premium range). For wetland operations, the company has introduced a new straight axle tractor in August 2000. In addition, Escorts also manufactures combine harvesters in collaboration with Class AG of Germany and paddy transplanters in collaboration with Yanmar of Japan. It has a subsidiary with Carraro SpA of Italy to manufacture transmissions for higher HP tractors.

Export of tractors is another thrust area. The company has two JVs, one in the USA and another one in Poland to market its tractors. It has also finalized distribution arrangements in Turkey, South Africa and Australia. Escorts exported a total of 1,685 tractors in FY2000. The company targets exports of 2,350 tractors in FY01 and 3,600 units in FY02.

Escorts will be focusing on research and development activities with an objective to develop products ahead of competition for domestic and international markets. The company intends to spend Rs625mn towards this over a period of three years. The company has already launched a BPR initiative. This has already helped reduce inventory and non-value added activities by 70%. Productivity also improved by 50%.

The company's long term vision includes becoming a market leader in the tractor industry by 2004 by offering a full range of mechanized solutions for Indian agriculture. Its forecasts for industry volumes and market share is as shown in the table below –

Year	FY2000	FY01E	FY02E	FY03E
TIV*	258,990	235,000	250,000	270,000
Sales	52,010	50,000	55,000	62,000
Mkt share	20.1%	21.1%	22.0%	23.0%

* - Total industry volumes

Networking

Escorts has also joined hands with a number of external agencies and NGOs working in the field of community development. A complete programme on "quality reproductive health care services", covering 25 villages in the Faridabad District is being run with the able support and help of "The Population Foundation of India". Escorts also works in collaboration with the National Association for the Blind in the field of prevention of blindness. This programme includes activities i.e. administering vitamin A, free screening of the school going children, distribution of glasses and the like. Besides this Escorts also works in close collaboration with other NGOs, as and when required, Escorts also allocates funds for other agencies, working in the field of improving rural environment, to run income generation programme, and upliftment of the rural poor.

Future Vision

The focus of each activity has been charging from time to time depending upon the local needs. The focus at present is to stregthen the existing programme as well ass to extend the services to a larger mass. Faridabad is an industrial town. In the last few decades there has been a massive influx of people to the town from various parts of the country especially from rural Haryana. As a result of which large number of Jhuggi clusters, colonies have come up. Escorts is engaged in ceaseless attempts to reach out to each and every beneficiary and hopes to receive the support and assistance from other developmental agencies as well.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.39.27
UK Pound	1	Rs.77.33
Euro	1	Rs.57.51

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	7
--CREDIT LINES	1~10	7
--MARGINS	-5~5	---
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		64

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions