Escorts Working Out To Reverse Losses

Desperate times call for desperate measures so Escorts Ltd, a company plagued with huge losses has decided to take control.The most dramatic one is the sale of 150 acres of land in Faridabad, which at CMP of Rs 6-8 crore per acre could bring in a cool Rs 1,200 crore. However, analysts believe that this will be the best news they have heard from the company for a very long time.

But shifting its Faridabad plant to a tax free zone and capitalising on the rising real estate prices is only one part of the story.The company wants to develop this land itself and not simply sell it. This could mean two options - either it ties up with a private equity real estate fund or it jointly develops the property with a big local property player.

The stock itself has been on a sharp and sudden up move. In the last week, when the BSE auto has been up 3.5 per cent, Escorts has gained 24 per cent. Today itself the stock spiked 12 per cent with volumes of close to eight million on the NSE and 3.64 million on the BSE.

The Nandas are on a big rescue mission. The land of course will be the biggest part of this restructuring story but they are also pumping in funds in Escorts'' construction equipment, a subsidiary where Franklin Templeton recently picked up Rs 70 crore, which is scheduled to hit the listed space in a year.