“The fourth generation at the Nanda family is absolutely committed to Escorts,” Nikhil Nanda, chairman and managing director of Escorts, has said soon after announcing the onboarding of Japanese tractor maker Kubota as joint promoter of the company along with the Nanda family. Kubota will infuse over Rs 9,400 crore into Escorts, including an open offer to its shareholders, to increase its stake to 53.8% with an eye on grabbing a larger pie of the world’s largest tractor market and use India as an exports base. The higher participation of Kubota is an attempt by Escorts to institutionalise the company, Nanda – himself part of the third generation in the family business – told Ketan Thakkar and Satish John in an interview immediately after the board meeting on Thursday. Edited Excerpts:
What gives you the comfort to hold a minority stake in the Company?
I must put my institution before me. This deal is the best deal that Escorts could ever think of and dream of, with the kind of ability and strength that Kubota already has as a global brand. It’s a historic moment not only for the company but also for the country – I mean getting a Japanese major to come in to set up something that would be a hub out of India. My grandfather, who founded this company, wanted to bring the world’s best to India and offer India’s best in the world. It’s a reflection of his ideology that today we are bringing the world’s best, which is Kubota, into India, and Escorts’ platform is to serve the larger good of the society and the farming community.
When you look at my stake percentage, my percentage stays where it is. There has been a lot of speculation in the past about the fact that the promoter family is on a sell-out mode. I want to categorically say that the family has no intention whatsoever (to sell). Money is not what drives us, it’s purpose. And for me, the fourth generation is totally committed towards a larger purpose. I’m absolutely honoured to have a chance to partner with Kubota and I look forward to building this partnership between Kubota and Escorts… Numbers are one part of an observation, but there’s a larger construct…and also to institutionalise Escorts, which is something that’s getting done.
Why not retain majority control, or even 50:50 share?
As I said, the number is one reflection. I think the most important question was how do we succeed? How do we create a company that can be institutionalised for the long run? You know, many family businesses in the last two decades have had a very large fall and a large gain and we can’t afford that kind of velocity. I think one of the important tasks that I came in with when I lost my father, when I became the chairman in 2018…was, how do you create Escorts which can depend beyond an individual? And I think this is a time that India needs to also take certain lessons of institutionalising and not looking at the very aspect that I need the golden share. I need the control.
It’s not about me. It’s about the institution first, and it is about the society first. It’s about how you can grow and I think realistically if I say Escorts should become and can become a leader. That’s an aspiration, but to put that aspiration into a script, you need to institutionalise. I mean, I’m very proud of the work that Escorts has done in the last five years… We have grown phenomenally.
Will the Nanda family legacy continue with Escorts?
The Nanda name is very much attached to the purpose and to Escorts. My life begins in the morning and before I sleep, I think only about Escorts. Today, what I have done is not just my decision, but a decision of our entire family. I have not acted as an individual, but I’ve acted from the philosophy and after conversation with the entire family. My family is totally committed towards the partnership announcement that we share an implicit trust with Kubota.
What will Kubota bring to the table?
After today’s announcement, my family and I have full confidence that the brand of Escorts along with Kubota will always fly and will be institutionalised.
Otherwise, the family businesses sometimes – forgive me to say this – you know, sometimes we make it very personal. I think here this institutionalisation, my family is very excited about. So, the Nanda family and the commitment of the fourth generation equally stands with mine.
Barring the Kirloskar family (Toyota Kirloskar), majority of Indian JVs with Japanese companies have seen an exit from Indian promoters eventually. How do you see this partnership unfolding?
I think what brings us together is not the number of shares that we own in the company. What brings us together is our character, our values, our ambitions. This is not a new partnership. The relationship with Kubota started in 2018. I met with Kitao San (Kubota’s president) in 2016 and I had a great opportunity of interacting with Watanabe San, and the trust and the kind of relationship that has grown in the last four to five years is the testimony of what we are announcing today… From my side, there is excitement and a total commitment of making this work.
Would you hold a golden share to protect your interests?
We will become joint promoters and there is a very big healthy respect for one another – of how we will share and contribute towards the journey that we have embarked on… We don’t believe that a golden share is an iota of success. As I mentioned earlier, there are other aspects that are more important.
So, I think it’s the common philosophy and the alignment, which the Kubota and Nanda family shares, that actually is the confidence of success that we will achieve in the future.
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