Escorts (ESC) has announced the divestment of major part of its Auto Products segment. Company's auto ancillary segment has been bleeding since long and we believe that it is a right strategic decision to focus on the core business and getting rid of loss making entities. Management has stated sale of OEM and exports division of the segment, while retaining after sales with company, which would be merged with agri business eventually. After sales business is reasonably profitable and adds to the profitability and return ratios of the company. Moreover, company would sell the plant and machinery to Pune based Badve Engineering, however, its land and building assets would be retained by Escorts for future development. This strategic decision strengthens our positive view on the management's commitment to enhance the returns by focusing on profitable segment and divesting loss making entities.