Escorts Kubota to Sell Railway Equipment Unit to Sona Comstar for ₹1,600 Crore

Leading engineering conglomerate Escorts Kubota Limited (EKL) announced on Wednesday that it has entered into a business transfer agreement with Sona BLW Precision Forgings Limited (Sona Comstar) to sell its Railway Equipment Business Division (RED) for ₹1,600 crore. The transfer will be conducted as a slump sale, with completion expected by September 30, 2025, subject to the terms of the agreement, EKL stated in a stock exchange filing.

The divestment is part of EKL's strategic focus on its core sectors of agriculture and construction equipment. "This move simplifies operations and allows capital reallocation to scale and improve the efficiency of our core businesses," the company said.

RED, a key supplier of railway components in India, produces items such as brakes, couplers, suspension systems, and rubber products. It also has new products in development, including HVAC systems, electrical control panels, and automatic plug doors.

Nikhil Nanda, Chairman and Managing Director of EKL, stated, "With a renewed focus on core business divisions, EKL aims to maximize stakeholder value and strengthen its leadership in the agriculture and construction equipment industries."

Sona Comstar sees the acquisition as an opportunity to expand its presence in the broader mobility sector and enhance its clean mobility product range by adding railway components.

Morgan Stanley India served as EKL's exclusive financial advisor for the transaction, with legal guidance from DMD Advocates and financial and tax advisory services from Transaction Square LLP.

HBL