Inadequate funding of star businesses has led to Escorts capitulating, and not capitalising on some of the highest growth industries...

IIPM PUBLICATION
In the nineties, H. P. Nanda secluded himself from the day to day management of the company and the second generation of Nandas hit the scenes, with Rajan Nanda taking charge of the majority of the group. Rajan started the diversification spree and led the group into the telecommunication sector. Escotel, a joint venture with Hongkong’s First Pacific Company, got the license to operate in Western U.P., Haryana and Kerala. But without proper capital funding, this decision turned out to be a disaster. Moreover, the agri-business was going through a rough patch due to successive monsoon failures, thereby, leaving the company starving for funds. The entrance of Reliance with a more economical CDMA technology proved to be a death blow to the company. Finally, Escotel business was sold off to Idea cellular at a loss of Rs.1.76 billion. This took a heavy toll on the whole Escorts group. Today, the group is debt-ridden. From two-wheelers to capital goods divestment, from profitability to gasping for air, within business group, another one bites the dust.

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Source : IIPM Editorial, 2006

Initiative :- An IIPM and Management Guru Professor Arindam Chaudhuri (Dean of IIPM)