Escorts Construction Equipment eyes land in Gujarat and MP for manufacturing unit

BANGALORE: Escorts Construction Equipment (ECEL), the fully owned equipment arm of the Rs 3,000-crore Escorts Group, is in talks with the governments of Gujarat and Madhya Pradesh to acquire land for a manufacturing unit.

Escorts will manufacture cranes, backhoe loaders and excavators at the proposed plant, which will have an installed capacity of 50,000 units. The company refused to share investment details but industry sources said Escorts will invest over Rs 5,000 crore.

Madhya Pradesh is currently the frontrunner for the proposed plant, a company executive said on condition of anonymity. Escorts has zeroed in on the two states because of logistical convenience, huge vendor base and availability of huge land parcel.

"We will require 40 acres of land and are currently negotiating with state governments. The decision will depend on the facilities the state governments offer," said Rajesh Sharma, vice-president, sales and marketing, ECEL. Gujarat and Madhya Pradesh are fast emerging as the favoured investment destination for corporates because of their tax regime and cheap labour. Gujarat has already attracted investments from domestic and foreign automakers.

While Ford and Peugeot have decided to set up manufacturing plants in Sanand, Maruti Suzuki has finalised a deal with the state government to set up aRs 18,000-crore manufacturing facility after production at its Manesar plant in Haryana was hit by a series of labour strikes.

In 2008, Tata Motors moved its production of 'Nano', the world's cheapest car, to Gujarat from West Bengal where it was facing stiff resistance from farmers. In a recent report on India's manufacturing sector, property consultancy firm Knight Frank India said that Gujarat's manufacturing sector is growing at 30% annually and has gained traction from corporates due to faster project clearances.

Separately, the company is also doubling its manufacturing facility at Ballabhgarh, Haryana. "We are operating at full capacity and is de bottling the plant to take up the production capacity to 12,000 units by 2012," Sharma said.