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Escorts: Company to hold board meeting to raise of funds on November 18

News: Escorts has informed stock exchanges that its board of directors will meet on November 18, 2021 to consider and evaluate proposals to raise funds via debt or equity. In a separate development, the company has also announced further price hikes in the tractor segment in response to a rise in prices of key raw materials.

Views: Escorts is a debt free company with cash surplus of ~Rs. 3,000 crore on its books as of March 2021. Raising of funds is most likely to be a replica of prior transaction with Kubota Corporation (Japan) further increasing the stake in the company through fresh issue of shares and similar shares being extinguished from the treasury shares that the company possesses. As on date, Kubota’s stake in the company is at ~10% with treasury shares amounting to ~17.5% with the company. Kubota increasing stake in the company is a positive development for Escorts and is likely to broaden its scope of operations in both domestic as well as global markets