Japanese crane manufacturer Tadano and Indian equipment manufacturer Escorts are to establish a joint venture to manufacturer Rough Terrain and truck cranes in India, with capacities of between 20 and 80 tonnes.
The joint venture company will be 51 percent owned by Tadano and 49 percent by Escorts with an initial capital of 600 million rupees ($8.6 million). The company will be based in Faridabad, on the south side of New Delhi. The new venture will be formally registered in the next few weeks and is expected top be operational by November. The company is looking to achieve annual revenues of 1.2 billion rupees ($17.4 million) by 2023.
The deal is part of Tadano’s strategy to become global market leader for mobile cranes and follows the establishment of Tadano India in 2012 to sell and service Tadano products in the region. The new venture will not only build Tadano cranes, but is expected to design products for the local market.
Escorts chief executive Nikhil Nanda said: "Escorts vision has always been to bring the world’s best to India and take India’s best to the world. The new joint venture with Tadano is a step towards catering to market demand for smarter, safer and bigger mechanised infrastructure solutions in the higher tonnage category. Production is expected to commence at Faridabad in the third quarter of this financial year."
Tadano chief executive Koichi Tadano added: "We are pleased to announce our partnership with Escorts group. Escorts has a strong technology legacy and diversified portfolio in construction equipment market and Tadano has a proven global technology and together we will cater to India and other growing economies which require safe, efficient and quality products and smarter construction technology. The joint venture will initially focus on the domestic market and later could also look at exporting to other markets.”
The deal comes barely three weeks after the death of Escorts chairman and managing director Rajan Nanda, who passed away on August 5th following a brief illness. Nikhil Nanda was appointed to take over from him later that week.
Escorts currently produce a range of pick & carry cranes including the Hydra articulated tractor cranes and heavy TRX articulated cranes, along with a four model range of Rough Terrains, topped by a 40 tonne model. It began expanding its crane operations in 2007 and became the importer for IHI crawler cranes from Japan and tower cranes from China’s Weihai Huata. IHI was acquired by Kato in 2016 and currently does not distribute in India.
Joint venture manufacturing operations are a challenge to get right, but Tadano has a good deal of experience – some of it bitter – from its experiences in China. This may well be why it has a controlling interest in this new venture.
The Escorts group is a dynamic business with experience building a wide range of equipment for construction, material handling and agriculture and with a new generation of the founding family at the helm, it clearly sees the growing demands in India and surrounding region for better, more sophisticated, safer lifting equipment. The joint venture will bring invaluable technology into the group, with the chance to shift its product design and technology to levels that would have been hard and costly to achieve on its own.
Not much has been said yet about branding, Tadano has been reluctant to put its sole brand name on any locally built until it is 100 percent sure on the quality. So we would expect the products to initially remain as Escorts and then Tadano Escorts.
This is a partnership between two parties that know what can go wrong with partnerships, joint ventures and strategic distribution agreements etc.. So both will be entering it with eyes wide open, so all in all this could well be win win deal.